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MIDLAND WORKERS'
LIBRARY
Its DALE END - BIRMINGHAM 4 |
Rw9nt9d by..
p. C.^:..
J
DEMOCRACY VERSUS SOCIALISM
DEMOCRACY
VERSUS
SOCIALISM
A CRITICAL EXAMINATION OF SOCIAUSM
AS A REMEDY FOR SOCIAL INJUSTICE
AND AN EXPOSITION OF THE
SINGLE TAX DOCTRINE
BY
MAX HIRSCH (Melbourne)
MACMILLAN AND CO., Limited
NEW YORK : THE MACMILLAN COMPANY
I9OI
j§Jl right ratmttd
TO THE MEMORY OF
HENRY GEORGE,
PROPHET AND MARTYR OF A NEW AND HIGHER FAITH,
THIS WORK IS
GRATEFULLY DEDICATED
PREFACE
A MOVEMENT which draws its vitality, as Socialism does,
from the poverty and haunting sense of injustice of its
rank and file, and from the moral elevation and unselfish
pity of the leaders, cannot be successfully met even by the
most triumphant demonstration of the impracticability of
the remedies which it proposes.
Revolting against the injustice of existing social
arrangements and the evils thence resulting, preferring
the risk of failure to ignoble acquiescence, the advocates
of Socialism are, not unnaturally, deaf to merely negative
criticism.
It has seemed to me that this is the main reason why
the many and able expositions of the impracticability of
the industrial proposals of Socialism have failed to
exercise any marked retarding influence upon its pro-
gress. Necessary and beneficial as such expositions are,
they do not touch the heart of the matter. Failing to
probe the socialist creed to its bottom, they do not
show that it is based on an insufficient and faulty
analysis of the causes of social injustice. Disregarding
the legitimacy of the social revolt which has taken the
form of Socialism, they fail to suggest any alternative
method for the removal of the evils which have pro-
voked it.
az
viii DEMOCRACY VERSUS SOCIALISM
It has seemed to me that greater success might be
achieved by acting upon these considerations. More-
over, there does not, as far as I know, exist any work
dealing with Socialism as a whole.
Able examinations of its industrial proposals abound ;
refutations of some or another of its economic and
ethical conceptions can be found here and there in
works the main purpose of which lies in other direc-
tions. But I have not been able to find any work
dealing with these conceptions and proposals as a
whole.
I have therefore endeavoured to fill this void. The
first part of this book is devoted to an analysis of the
teaching embodied in Socialism, exhibiting its leading
principles and conceptions and the changes in social
arrangements which must directly result from their
application. The second and third part expose the
erroneous nature of the economic and ethical concep-
tions of Socialism, and exhibit what I regard to be
the true principles of social economy and ethics.
The fourth part exhibits the conflict between the
industrial and distributive proposals of Socialism and
the principles thus established as well as the disastrous
consequences which must arise from the acceptance of
the former.
In the fifth and concluding part I have endeavoured
to depict and vindicate the social reforms necessary to
bring our social system into harmony with these economic
and ethical principles, as well as their sufficiency for
the achievement of the ultimate object of Socialism
and Individualism alike, the establishment of social
justice.
PREFACE ix
In carrying out these objects I have drawn freely
on the great modern exponents of political economy
and ethics, especially on the writings of Henry George,
Bohm-Bawerk, and Herbert Spencer. While grate-
fully acknowledging my indebtedness to them, I may
nevertheless claim to have contributed some original
matter to the treatment of the subject — matter which, I
trust, may stand the test of criticism even where it
embodies conclusions which differ from those arrived at
by these authorities.
To many friends my thanks are due for valuable
assistance graciously rendered in preparing this work for
the press ; to none more, however, than to Mr. R. J.
JefFhiy, of London, who, in order to hasten its appearance,
has undertaken the laborious task of revising the proofs.
Melbourne, March 1901.
CONTENTS
INTRODUCTION
Existing social conditions and tendencies — Undeserved poverty — The
concentration of wealth — The social problem defined — The
attractiveness of Socialism — The progress of Socialism — The
general character of Socialism Pages zxix-xxxiv
PART I
AN ANALYSIS OF SOCIALISM
CHAPTER I
The Economic Conceptions
Karl Marx's theories of value and surplus- value — The failure of com-
petition as an industrial regulator — The evil of competition qua
competition — The reconciliation of these two views — The
individualistic view of competition . .3-11
CHAPTER II
The Industrial Proposals
State-ownership and management of industry — Reconciliation of
apparently conflicting socialist declarations — The abolition of
rent and interest — Consequential extensions of these pro-
posals ....... 12-23
xii DEMOCRACY VERSUS SOCIALISM
CHAPTER III
The Industrial Proposals — Continued
The methods of transferring land, capital, and industries to the State —
Examination and reconciliation of conflicting methods — Further
consequential changes in industrial organisation — The division of
authority between local and central government — The organisa-
tion of labour — Persistence of private ownership in consumption-
goods and of rent — Definition of the industrial proposals of
Socialism ..... Pages 24.-32
•
CHAPTER IV
The Ethical Conceptions
The denial of natural rights — Its necessary consequence of the indus-
trial and distributive proposals of Socialism — The denial of
individual rights to labour-products — The reasoning upon which
it is based : (i) The impossibility under modern industrial con-
ditions of determining the part or part-value of any industrial
product due to the labour of any particular individual ; (2) The
inequity of individuals benefiting by their special capacity and
industry, these being due to heredity — The inequity of individuals
benefiting directly by their use of social opportunities . 33-39
CHAPTER V
The Distributive Proposals
Justice in distribution, the original object in Socialism — Disagreement
amongst socialists as to what constitutes justice — Examination of
the various systems of distribution open to Socialism — The
impossibility of determining individual services and the value
of products under Socialism otherwise than by the arbitrary
decision of State officials — Equal distribution in value, the system
which offers least difficulties and finds the greatest support — The
consequential alterations arising from distribution of equal values
in the organisation of science, art, literature, the professions, and
domestic service ...... 40-46
k
CONTENTS xiii
CHAPTER VI
Modifications of Family Relations
Economic independence of women — ^Abandonment of separate family
homes — Transference of children to the care of the State at an
early age ...... Pages 47-48
CHAPTER VII
The Political Conception
Political equality — The abolition of hereditary aristocracy and mon-
archy — The extension of the function of local governments —
Centralisation — Internationalism .... 49-51
CHAPTER VIII
Is Socialism Scientific ?
The nature of science — Socialism empirical on account of its denial of
any natural law of distribution and of natural ethics . 52-53
CHAPTER IX
The Definition of Socialism . 54-55
PART II
ECONOMICS
CHAPTER I
Marx's Theory of Value
Every politico-economic theory is based on some conception of value
— Marx's theory of value stated — Its contradictions exposed
{a) with regard to goods, (i) with regard to labour — The theory
tested deductively — Socialists who repudiate the theory, never-
theless accept Marx's deduction from it . . . 59-68
xiv DEMOCRACY VERSUS SOCIALISM
CHAPTER II
The Quantitativb Theory of Value
Professor W. S. Jevons's theory — The Austrian theory — Desire and
utility — The condition which confers value on useful things —
The classification of utilities — Value is determined by the
urgency of desire, not by its kind — The Robinson Crusoe example
— Value of consumption -goods determined by their marginal
utility — ^Value of production-goods determined by the marginal
utility of their ultimate products — The relation of value to cost
of production ..... Pages 69-76
CHAPTER III
Origin and Nature of Capital
Socialist definitions of capital — Their absurdities and contradictions —
The origin of capital and its function in the co-operative process
of production — The increased yield from the extension of pro-
ductive processes in time — The function of exchange in co-
operative production — The nature of capital defined — The
ownership of capital — The organisation of capitalist industry
77-90
CHAPTER IV
The Origin and Nature of Spurious Capital and Spurious
Interest — Debts and Monopolies
The points of resemblance between real and spurious capital — The
differences between rights of debt and real capital — The essential
character of monopolies — Monopoly in land — Monopoly in fran-
chises — Differentiation between monopoly- value and capital-value
in the same undertaking — Comparison of the effect of special and
of exclusive legal privileges . . . 91-100
CONTENTS XV
CHAPTER V
The Origin and Nature of Spurious Capital and Spurious
Interest — Continued
Industrial monopolies^ — The socialist view of industrial monopolies —
Industrial monopolies based on legal privileges^ — Protectionism
the fruitful source of industrial monopoly — Monopolies which
arise from the co-operation of two or more legal privileges —
Monopoly of unprivileged industries arising from the support of
privileged industries — The conversion of monopoly- rights into
spurious capital .... Pages 101-112
CHAPTER VI
A Comparison of Real with Spurious Capital
Spurious capital would disappear with the repeal of laws conferring
special privileges — ^All real capital ephemeral ; spurious capital
may continue for ever and accumulates — Social progress tending
to reduce value of real capital, increases the value of spurious
capital — The greater part of existing capital is spurious capital
113-117
CHAPTER VII
Surplus-Value
Marx's theory of surplus-value disproved by the disproval of his theory
of value — Examples of surplus-value further disproving his theory
II 8-1 2 1
CHAPTER VIII
Land and Rent
The twofold meaning of the term " land " — Space and time — Space
as affecting the use of land — Natural and social variations in the
productivity of land — Conditions which favour the concentration
xvi DEMOCRACY VERSUS SOCIALISM
of exertion upon land — Influence of these conditions and vari-
ations upon the distribution of wealth — The limitation of
Ricardo's Law of Rent and the Malthusian doctrine — The law
extended — ^Natural rent arises from the extension of labour in
space — Spurious rent rfie result of private ownership of land —
Private appropriation of rent destructive of the economic and
ethical functions of rent . . . . Pages 122-134
CHAPTER IX
The Theory of Interest
Present wants mostly supplied by past labour, while present labour is
mostly directed to the satisfaction of future wants — Goods avail-
able at present valued more highly than like goods which be-
come available in the future, on account of {a) differences in
the provision for wants, {i) under - estimation of future wants,
(r) technical superiority of present goods — Loans resulting from
individual differences in the relative valuation of present and
future goods — Averages of such valuations produce rates of interest
— The tendency towards lowering the rate of interest — Interest
is the increment of value arising during the growth of future
into present goods, />. arises from the extension of labour in
time ...... 135-143
CHAPTER X
The Wages of Labour
«
Natural rent not a deduction from individual wages, but a social fund
— Natural interest not a deduction from individual labour, nor a
common fund — Illustrations — The function of the capitalist
which entitles him to interest — Wages consist of all the produce
of labour — The minimum and maximum wages of labour — Why
labour, under just legal conditions, is more powerful than capital,
and must obtain maximum wages — The tribute exacted from
labour by monopoly, and by unpri\'ileged employers when
monopoly prevails — Influence of monopoly on production and
the demand for labour — Under-consumption — Unemployment
and commercial crises .... 144-160
CONTENTS xvii
CHAPTER XI
The Component Parts of Surplus- Value
Surplas-value arises partly from natural law, partly from legal enact-
ments — The action of each of its component parts on the distri-
bution of wealth — Impossibility of abolishing rent and interest —
Rent can be made common property ; interest cannot be made
common property — The private appropriation of interest just
and innocuous ; the private appropriation of rent unjust and
harmful— The unscientific character of the economic basis of
Socialism ..... Pages 161-165
CHAPTER XII
CoMPETrnoN
Competition an inherent necessity of life — Industrial competition
twofold : (j) in which the number of prizes is less than that of
competitors ; (^) in which the prizes are equal to the number of
competitors, but of varying value — The latter kind predominates
— Competition the only means of ensuring efficiency of service
and equality of reward to service rendered — Scarcity of employ-
ment alters character of industrial competition — ^The removal of
causes productive of scarcity of employment a social necessity,
not the removal of competition . . . 166-174
PART III
ETHICS
CHAPTER I
The Denial of Natural Rights
The fundamental ethical conception of Socialism — The meaning of
the conception made clear — The denial of natural rights con-
tradicted by other fundamental conceptions of Socialism : {a)
the duty of the State to secure happiness ; (i) the claim of
xviii DEMOCRACY VERSUS SOCIALISM
majority rule ; (r) the assertion of the injustice of existing con-
ditions — The denial examined deductively — Murder and theft
condemned for other reasons than the prohibition of the State —
Certain rights universally recognised, and recognised more fully
as societies evolve — The State unable to alter the sequences of its
acts — The origin and nature of rights . . Pages 177-185
CHAPTER II
Happiness or Justice
The universal relation between the discharge of functions and sensa-
sations — Happiness consists of the due discharge of all functions
— Freedom to exercise all faculties the first requisite of happiness
— Equal freedom, i,e, justice the condition for the greatest aggre-
gate sum of happiness — Happiness cannot be distributed — Equal
distribution of means to happiness cannot secure the greatest sum
of happiness — Justice, securing equal rights to all, alone can
result in greatest sum of happiness — The relativity of sensarions
to individual organisms and to the state of such organisms, and
consequent impossibility of governmental determinations of acts
conducive to general happiness — ^Justice a more intelligible aim
than happiness ..... 186-194
CHAPTER III
The Origin and Growth of Law
Recognition of individual rights precedes the State and the formulation
of laws — Leges Barbarorum are collections of pre-existing tribal
customs — The growth of custom among Teutonic tribes — Growth
of the Feudal Law, the Canon Law, and the Law of Merchants —
The development of the Common Law and of Equity in England
— The growth and codification of laws in Germany and France —
Laws were declared by authority, but not made by it 195-206
CHAPTER IV
Natural Rights
The limit of State interference with individual action — Undisputed
natural rights . . . . .207
\
CONTENTS xix
CHAPTER V
The Ethics of Distribution
The development of social life in the direction of altruism — The law
of immaturity — Altruism originates in parental emotions — ^The
law of maturity — ^Thc survival of the fittest — The penalties of
inefficiency — ^The consequences of State interference with the
survival of the fittest — The qualities and sentiments which con-
stitute fitness in the social state — Monopoly fostering the sur-
vival of the less fitted ; justice in distribution tending to raise the
general degree of fitness — Distributive proposals of Socialism
disastrous to society — Their defence examined : {a) that com-
petition fails to secure a reward commensurate vnth services
rendered ; (^) that special energy and ability, being the result of
ancestral evolution, the '^ rent of ability " is a social inheritance ;
(r) that the power of any individual to supply his wants in the
social state depends upon the desire of others for his services ;
{if) that society is the only heir to the social inheritance of
intellect and discovery — The right to an equal opportunity for
the acquisition of knowledge — Distinction between equal rights
to the possession of things and equal rights to the opportunity for
the production of things • . . . Pages 208-227
CHAPTER VI
The Right to the Use of the Earth
The right to the use of the earth a natural right and equal for all — No
generation can limit or abolish the equal rights of future genera-
tions — ^Justice condemns private ownership of land, as interfering
with the law of equal freedom — The denial of equal freedom
through private ovimership of land originates and is maintained
by force — The duty of the State to enforce regulations giving
equal rights to land — The appropriation of rent for common
purposes securing equal rights to land — ^An illustration 228-232
CHAPTER VII
The Ethics of Property
The proprietary sentiment recognisable in animals — The causes ot
its indefiniteness and limitation among savages — Its growth among
XX DEMOCRACY VERSUS SOCIALISM
pastoral and agricultural tribes — The origin and growth of slavery
— The causes of its abolition — Communal use and ownership of
land — The Teutonic mark — War originates private ownership of
land — Its original limitations — Landowners, as the governing class,
removing such limitations — Property in slaves, in land, and in
monopolies resting on a different basis than property in labour-
products — The ethics of property in labour-products — Property in
land, slaves, and monopolies directly infringes upon the rights of
property, and leads to indirect infringements — The failure of the
State to make like claims upon property as upon lives for
defensive war — Socialism would merely change the incidence of
injustice with regard to property . . Pages 233-245
i(
CHAPTER VIII
The Right of Free Industry
The right to labour," what it is — Socialism, abolishing the natural
right to work, would establish slavery — The essence of slavery —
The line of ethical demarcation between free and unfree indus-
tries — Objections considered : {a) Fraudulent promises and adult-
erations ; (3) Factory legislation . . . 244-249
CHAPTER IX
Individualism
Socialist conception of the prevalence and influence of Individualism
— Social injustice arises not from prevailing Individualism, but
from its legal limitation — All social evolution proceeds from
primitive Socialism in the direction of Individualism — The ethical
difference between Socialism and Individualism — Existing limita-
tions of Individualism and their result — The persistence of evils
arising from past interferences of the State with individual free-
dom — Examples of such interferences in England — The degrada-
tion of English labourers and remedial measures — Full Indi-
vidualism consisting of the abolition of all interference with
equal freedom alone can complete the elevation of the working
classes ...... 250-260
CONTENTS xxi
PART IV
THE OUTCOME OF SOCIALISM
CHAPTER I
The Unconscious Growth of Social Structures
Social evolution, like all evolution, consists in the development, multi-
plication, and increasing definiteness of structures — The variety,
interdependence, and definiteness of the structures of co-operative
societies — Individual desire to satisfy wants with least exertion,
the originating cause of social structures — Their growth unpre-
meditated ; not social, but individual wellbeing being the im-
mediate object aimed at — Socialism involves the substitution of
conscious creation for unconscious growth — The evolution,
growth, and decline of social structures described — Socialism
must reduce to a minimum the development of new and decline
of old structures — Its influence on inventions and discoveries —
The shrinkage of social structures under Socialism — Stagnation
rapidly followed by retrogression, the result of Socialism
Pages 263-276
CHAPTER II
The Unconscious Discharge of Social Functions
Co-operation the condition of social life — The two kinds of co-
operation : {a) aiming directly at common ends, and compulsory ;
{l) aiming directly at individual ends, and voluntary — Their
contrasts — Illustration : the provisioning of an army and of a great
city — The limited scope of compulsory co-operation — Impossi-
bility to consciously direct the major activities of social
life ..... . 277-288
CHAPTER III
The Industrial Organisation of the Socialist State
Compulsory regularion declines with mail's better adaptation to social
life — Socialism, disregarding this law, increases compulsory regu-
xxii DEMOCRACY VERSUS SOCIALISM
lation — Socialist and military organisation compared — Socialist
admissions — Compulsory allocation of occupation and location —
The enforcement of " equality of service " — Slavery the neces-
sary result of the conscientious discharge of its regulative func-
tions by the socialised State . . • Pages 289-299
CHAPTER IV
The Political Outcome of Socialism
The tendency of governmental structures to escape from popular
control — The political machine in the United States — The
experience of trade unions — Mr. and Mrs. Sidney Webb's
statements — Differences between the regulative agency of trade
unions and that of the socialised State — The bribing and terror-
ising power of the latter — Its control of the Press — Impossibility
of resistance to oppressive or corrupt use of power — Different
systems of appointing and controlling regulative agency examined
— Inevitability of such oppression and corruption — Evolution of
caste system and hereditary despotism — The experience of the
United States cited — Impossibility of strikes . 3CX>-3i6
CHAPTER V
The Industrial Oinx:oME of Socialism
The motive for industrial exertion — Its weakness under existing con-
ditions and total absence under Socialism — Invalidity of the
socialist's reply to this contention — The inefficiency of the regu-
lated labour equalled by the inefficiency of the regulators, and
followed by a decline in the efficiency of the national capital —
Gradual reduction in the productivity of national labour — Uni-
formity in poverty the result . . . 317-326
CHAPTER VI
The Family under Socialism
The evolution of parental emotions and their growth into generally
altruistic sentiments — Monogynic relations best subserve this
CONTENTS xxiii
evolution and the wellbeing of offspring — Socialism must
materially alter this relation — The early separation of parents
and children weakening altruistic sentiments generally — Its influ-
ence on the propagation of the race, and upon the character and
permanency of the marital relation — These tendencies supported
by the pecuniary independence of women and the absence of a
separate family home — The influence of public training on the
character of the children — Survival of the unfittest — Retrogression
and decay the inevitable result — Socialist evidence confirming the
facts adduced .... . Pages 327-336
CHAPTER VII
The Ethical Oinx:oME of Socialism
The mental and physical adaptability of man to surrounding con-
ditions — The reciprocal influence of individual character and
social control — Appropriate sentiments accompanying various
stages of social evolution — Socialism must develop appropriate
sentiments and ideas in the members of the socialised State, viz.
implicit obedience and submission to authority ; loss of the sense
of justice ; untruthfulness, selfishness, and unchastity 337-342
PART V
THE SINGLE TAX
CHAPTER I
Introduction
Private monopoly, especially land monopoly, the cause of social in-
justice — Recapitulation of conclusions drawn in preceding chap-
ters — Recapitulation of distinctions drawn between land and
wealth, inclusive of capital . . . 345'34^
xxiv DEMOCRACY VERSUS SOCIALISM
CHAPTER II
Objections to Principles
Lord Bramwcll's theory of labour -value in land — "The Fabian
Society " : the compound nature of capital ; the impossibility of
distinguishing between capital and land ; the ethical equality of
rent and interest ; that capital may have been acquired unjustly,
while land may have been purchased with rightfully acquired
wealth — Mr. J. C. Spence, on behalf of **The Liberty and
Property Defence League ** : that wealth is no more " made " by
labour than land ; that all forms of wealth are limited in amount
as land is limited ; that if land is common property, all men are
part-proprietors of Canadian land, and none of it can be taken
possession of without the special permission of all men — Mr.
Lecky's version of this argument — that priority of claim is the
basis of all property -rights ; that further corollaries from the
theory of common property in land are : the prohibition of the
use of any natural object involving its destruction ; the badness of
all titles to private property ; the prohibition of the appropriation
of anything — Professor Huxley: the non-existence of natural
rights ; that equal right to land involves the denial of individual
rights to wealth ; that individual property in land is a corollary of
the derivation of individual rights of property from the exertion
of labour. .... • Pages 349-371
CHAPTER III
The Method of Reform
Equal right to the use of land involves as a corollary the duty of
governments to frame and enforce regulations safeguarding this
right — Where this right is being disregarded, the regulations must
be framed in a manner which avoids unnecessary hardship being
inflicted upon those who suffer from and those who benefit by this
disregard — Other conditions to be observed — Nationalisation of
land by purchase — It would miss the object aimed at and would
produce secondary evils — Nationalisation of the rent of land by
purchase produces similar results — Nationalisation of the land by
sudden confiscation produces utmost hardship to owners and non-
owners alike and produces secondary evils^ — Henry George's Single
CONTENTS XXV
Tax method alone complies with all the conditions — Its working
and results — Its applicability to franchise-monopolies — The treat-
ment of routes of transportation . . . Pages 372-384
CHAPTER IV
The Ethics of Compensation
The demand for compensation by defenders of private ownership of
land illogical — Lord Bramwell's and Mr. Lecky's formulation of
the same — ^The demand for compensation by the upholders of
equal rights to land considered — Its validity when Land Nationali-
sation is the method of reform ; its invalidity when applied to the
Single Tax method — The right to compensation involves the
denial of equal rights to land and of individual rights to labour-
products — Compensation would perpetuate the existing system in
another form — ^The plea of constructive general sanction — ^The
plea that land has been purchased with labour-products — ^The plea
of disappointed expectation — ^The plea of destructive effect on the
sanctity of property . . . . 385-395
CHAPTER V
The SupnciENCY of the Reform
It abolishes speculation in land, lowers rent, increases demand for labour,
and raises wages — It renders labourers independent of capitalist
employers — ^The disappearance of involuntary unemployment —
The disappearance of large fortunes — ^Wage-industry superseded
by co-operative industry — Almost disappearance of a separate class
of capitalists — The disappearance of restrictive legisladon — ^The
dispersion of population and garden-homes — Improvement in the
lot of women — ^The re-population of the country — Objections by
socialists considered — Mr. H. M. Hyndman : rent an insignificant
amount ; the relief of capitalists from taxation ; that wages fall
/rfn' passu with the removal of taxation from wage-earners — Mr.
J. A. Hobson : that other classes have partaken, even more than
landowners, of the immense growth of wealth ; that the Single
Tax system would fail unless adopted universally — The Fabian
Essays: the destruction of opportunities for employment furnished
by the wealthy classes .... 396-413
xxvi DEMOCRACY VERSUS SOCIAUSM
CHAPTER VI
Mr. Edward Atkinson's Objections
That the Single Tax falls on the actual producers of wealth — ^That it
would prevent men of small means from using land — That
it would throw all valuable land into the hands of great
capitalists, and would not diminish their incomes — ^That the tax
would be shifted to consumers, and that it could not be so shifted
— ^That the tax would fall most heavily on farmers — ^That the poor
will pay as much as the rich — ^That it is impossible to determine
the '*site** value of land — ^That no one would make improve-
ments unless the land were leased for long periods at a fixed
rent ..... Pages 414-425
CHAPTER VII
Professor Francis A. Walker's Objections and Admissions
Objections: That industrial crises are not due chiefly to speculative
holding of land — That valuable land is not withheld from use —
That the effect of improvements in methods of production does
not generally increase rent in a stationary population and where
all land is private property — Increase of agricultural wages in
Great Britain — Increase of capitalists' profits — Increased produc-
tion does not necessarily involve an increased demand for land,
and the latter habitually falls short of the increased demand for
labour — ^That improvements in transportation invariably reduce
rent — That all improvements in agriculture invariably reduce
rent — Admissions: That the landowner renders no service in
return for the rent which he appropriates — ^That property in land
differs materially from property in labour-products and occupies a
lower ethical level — That increase in the value of land is due, not
to the exertions and sacrifices of its owners, but to those of the
community — Further Objections : That the admitted injustice in-
volved in private ownership of land cannot be removed without
giving rise to greater evils. These are : enormous addition to the
power of governments, and exhaustive culture of the soil 426-45 1
k
CONTENTS xxvii
CHAPTER VIII
CoNnRMATION BY SOCIALISTS
Extracts from the final chapter of Karl Marx's Capital^ Fabian Essays —
Sidney Webb, in Socialism in England — August Bebel, in Woman —
Sidney and Beatrice Webb, in Problems of Modern Industry —
Edward Bellamy, in Equality . . • Pages 452-463
APPENDICES
1. The annual rental-value of land in the United Kingdom . 467
2. Revenue derived from taxation in the United Kingdom . 468
3. Annual rental-value of land and revenue derived from taxa-
tion in the United States .... 468
4. Annual rental-value of land and revenue derived from taxa-
tion in the Colony of Victoria . . • 469
5. Estimated contribution of capitalists to taxation in the
United Kingdom . • • . . 469
6. Estimated contribution of working population to taxation
in the United Kingdom .... 470
7. " The Rage for and Trend of Trusts," reprinted from The
Public^ Chicago ..... 470
INTRODUCTION
The greatest optimist cannot r^ard with satisfaction the
social conditions of the period through which we are
passing. At no time could wealth be produced with so
little effort ; at no time was wealth so abundant ; yet
mankind has benefited but inadequately by this unequalled
increase in the material means of happiness.
The statistics of lunacy and suicide confirm the general
conviction that the effort required to gain a livelihood is
constantly becoming greater and the strain on the nervous
energy of all workers more exhausting. Though a few
amass fortunes as huge as they are usdess for the enjoy-
ment of anything but irresponsible power, the great mass
of the people, the bulk of the wealth-producers, are only
a little better off than at the period of their greatest
degradation ; while below them there is accumulating a
mass of hopeless human wreckage which makes our great
cities comparable to putrefying refuse heaps.^ Last,
not least with this very advance in the facility of making
wealth, the opportunity to do so has become more re-
stricted and more uncertain for the working population.
Apart from the ever-increasing mass of those who cannot
find any employment, a much larger number are exposed
to the evil of occasional unemployment ; and recurring
^ **No one can contemplate the condition of the mastet of the people without
desiring something like a revolution ibr the better.** — Giffen, Esuys in Finance^ 2nd
aeries, p. 393.
** It may well be the case, and there is every reason to fear it is the case, that there
is collected a population in our great towns which equals in amount the whole of those
who lived in England and Wales six centuries ago, but whose condition is more
destitute, whose homes are more squalid, whose means are more uncertain, whose
prospects are more hopeless than those of the poorest serfii of the Middle Ages and the
meanest drudges of the mediaeval cities.*' — Rogers, Six Centuries of Work mid IVa^u
XXX DEMOCRACY VERSUS SOCIALISM
industrial crises, general and partial, hold up for ever
before his eyes that worst terror of the decent, self-re-
specting worker — more or less continued unemployment.^
Moreover, wealth is gradually concentrating ini fewer
and fewer hands, a process which, if unchecked, must
ultimately lead to the division of the population into two
warring classes with no interest in common, a ruling
plutocracy holding irresponsible power, and using it
ruthlessly to oppress the people, confronted by a mass of
hopeless proletarians for ever striving to shake off the
yoke imposed upon them.* Long before this extreme is
reached, however, social revolution, with all its horrors, will
have put a temporary check upon this tendency.
The problem which, with ever-increasing urgency,
demands a solution at the hands of our society, if peace
and progress are to be preserved, is that of the persistence
of undeserved poverty in the midst of abundant wealth ;
of unemployment in the midst of unsatisfied desires.
^ **In a normal state of industry in machine-using countries there exists more
machinery and more labour than can find employment, and only for a brief time in each
decennial period can the whole productive power of modem machinery be fully used."—
Hobson, The Eindution of Modern QfitaHsm^ p. 197.
^ In The Arena of December 1896, page 86, Eltweed Pomeroy publishes a table
showing the distribution of wealth in Great Britain among males of twenty-five years
and over, based upon the statistics of death and death-duties for the years 1890-94.
In explanation he states : — ** In my opinion it is an under-statement of the con-
centration of wealth in Great Britain ; and yet the facts are startling. Over 56 per
cent own nothing ; and if we add the three first classes together, we have nearly 80 per
cent owning less than 3 per cent, and then a little over 20 per cent owning 97 per cent ;
if we add the first four classes together, we have over 90 per cent of the people owning
less than 8 per cent of the wealth of the country, and under 10 per cent owning 92 per
cent ; and if we take the last two classes, we find that less than one-fiftieth of the
people own over two-thirds of the wealth \ and then look at that last class of million-
aires, numbering less than three one-hundredths of i per cent, and yet owning over 13
per cent of the wealth."
Dealing with the State of Massachusetts, he shows the distribution of wealth to
have altered between the period 1829-31 and that of 1879-81 as follows, pp. 91, 92 : —
** The class with nothing have increased from 62 to 69 per cent. The millionaires
have increased from .002 per cent with 8} per cent of the wealth, to .08 per cent with
24 per cent of the wealth. The number of small property owners with less than a
(1000) thousand (dollars) have decreased from under 20 per cent to 9 per cent, and their
property has decreased from a little over 4 per cent to just above i per cent. The
rich men worth between $100,000 and $500,000 have increased from .009 per cent to
.50 per cent, and their wealth has increased from nearly 13 per cent to 26 j per cent.
The moderately well off, worth from $1000 to $5000, have remained nearly the same
in per centage of population, around 13 per cent, but their wealth has decreased from 21
per cent to 8 J per cent."
George K.Holmes, of the United States census office, in tht Science SluarterlyyDtctmhtt
1893, states : — ** Twenty per cent of the wealth of the United States is owned by three
one-hundredths of i per cent of the population j 71 per cent is owned by 9 per cent of the
fiimilies, and 29 per cent of the wealth is all that falls to 91 per cent of the population."
INTRODUCTION xxxi
Why is it that millions of men cannot get enough bread
to eat, when two or three men can produce sufficient
wheat to maintain a thousand men for a year ? Why is it
that millions of human beings, in the most civilised
countries, are shivering in insufficient clothing, though
four of them can produce sufficient cotton or woollen cloth
for one thousand of them ? Why are so many without
decent boots, when a year's labour by one man can produce
nearly 4CXX) pairs of boots ? Why is it that while a boot-
maker wants bread, a tailor boots, and a baker clothes,
all three, instead of supplying each other's wants, are
compelled to want in enforced idleness ?
These are questions which ought to present themselves
to every thinking man, and which appeal with special
urgency to the minds of the wage-earners. For the slight
improvement in the condition of the majority of them,
the higher wages and shorter hours or labour which
organisation and legislation — especially legislation which
abolished previous interference with equal freedom — ^have
enabled them to exact, have given them leisure and
strength to consider their social condition. State schools
and dieap literature have given them access to the printed
thoughts of their leaders. The concentration of industry
in great cities has brought the additional stimulus of an
easy interchange of thought. Political enfranchisement
has endowed them with the hope that their aspirations
of to-day may be the realised condition of the near
future.
Socialism offers a plausible answer to these questions ;
appeals to the dissatisfied with an easily understood
remedy for the social and industrial evils which offend his
sense of justice. Its harmonious, if superficial, simplicity
captivates the half-educated from whom it requires no
mental exertion ; its passionate appeals to the highest
principles of ethics and the feeling of human brotherhood
intoxicate the emotional, while its pretended claims to
scientific completeness and evolutionary succession have
drawn within its ranks many men of marked ability, who
have despaired of any other method for the removsJ from
our civilisation of the evils which they abhor.
xxxii DEMOCRACY VERSUS SOCIALISM
It is therefore not astonishing that Socialism has
made and is still making progress, though its progress
may easily be over-rated.^ For great numbers of men
are habitually classed or class themselves as socialists who
in reality know little or nothing of its nature or have no
sympathy with its proposals. Whoever seeks to improve
social conditions, even if the methods which he proposes
are fundamentally different from those of Socialism, is
nevertheless regarded as a socialist by unthinking or
prejudiced defenders of the existing system. On the
other hand, large numbers of men, profoundly conscious of
the injustice of existing social arrangements, lightly adopt
the name of socialist, though they are ignorant of the
real aims of the party which they thus apparently join.
While the numerical growth of Socialism is thus over-
estimated, it nevertheless is sufficiently great to demand
the most earnest attention and consideration.
What then is Socialism ? The great majority of the
middle -class population, who derive their information
mainly from the daily newspaper, regard it either as a
revolutionary attempt at an equal division of wealth, or as a
foolish aspiration for the sudden establishment of a Utopia.
No doubt the speeches and writings of the earlier socialists
have given ample excuse for these mistakes, and even now
there are many socialist speakers and not a few writers
whose violent utterances and extravagant dreams lend
themselves to easy misunderstanding and misrepresenta-
tion. Apart, however, from the consideration that such
extravagances are inevitable in any movement which
draws the mainspring of its activity from a manly revolt
against direful injustice and from a noble compassion for
the suffering which this injustice inflicts upon millions of
human beings, it is manifestly unjust and mischievous to
judge a great movement by its accessories instead of by
its essentials, — unjust, because it amounts to misrepre-
*
1 ** Although Socialism involves State control. State control does not imply
Socialism — at least in any modern meaning of the term. It is not so much to the
thing which the State does as to the end for which it does it, that we must look before
we can decide whether it is a socialist State or not. Socialism is the common holding
of the means of production and exchange, and the holding of them for the equal benefit
of all" — Fabian Essays, p. 212.
INTRODUCTION xxxiii
sentation; mischievous, because, while producing a false
sense of security on one side, it exasperates the other.
It is therefore deeply to be regretted that socialists
have just cause to complain that this treatment is only too
often meted out to them.
Socialism has long since cast off its early revolutionary
and Utopian swaddling-clothes, and has been transformed
into a political system working in constitutional channels.
Instead of depending upon a revolution for the realisation
of its ideas, it looks to a gradual transformation of our
society through the successive legalisation of small incre-
ments of its teaching. Instead of counting upon the
sudden creation of a Utopia, it looks upon society as
an evolutionary organism, which, through the gradual
adoption of socialistic proposals, is bringing its structure
into harmony with its environment. Modern Socialism
is, therefore, a particular view of the organisation required
to bring society into harmony with its industrial expansion,
and is based on certain historical, economic, ethical,
industrial, and political conceptions.
Nor must it be omitted to acknowledge here that,
contrary to the crude opinion of " the man in the street,"
Socialism owes its development and progress to men of
high ability, character, and attainments ; that its exponents
have rendered important services in the development of
economic science, especially from the historical stand-
Eoint ; and that it inculcates a spirit of altruism and
rotherhood among men which gives a high moral
and educational value to much of its literature. The
prevailing neglect of the social for the individual side of
life, the glorification of wealth and luxury and other
^m'darly regrettable tendencies of modern societies, have
been and are being denounced by socialist teachers with
enthusiastic devotion. If they mostly err in the opposite
direction, if they, in their turn, disregard the valid claims
of the individual in man and mistake compulsion for
beneficence, it is only the inevitable backward swing of
the pendulum before an equilibrium is reached.
A definition of Socialism which shall alike exclude all
those reformatory proposals which, while they bear a
xxxiv DEMOCRACY VERSUS SOCIAUSM
semblance to those of Socialism, yet spring from opposite
motives, and will set in motion opposite tendencies, and
which shall not fail to include all that Socialism posits,
presents certain difficulties, because Socialism has not, on
all points, arrived at a static condition. In many respects
it is as yet in a state of development. Moreover, the
difficulty is increased by the claims which many socialists
advance, to count as evidence for the acceptance of their
creed, political measures, which, though neither adopted in
a socialistic spirit nor of a socialistic character, neverthe-
less bear a certain semblance to socialistic proposals.^
Nevertheless, certain leading and essential characteristics
are sufficiently developed to enable general limits to be
drawn. In endeavouring to elucidate such a definition at
the present stage of this inquiry, it is, however, necessary'
to confine it to the absolutely essential, leaving minor
characteristics for subsequent treatment.
^ '^One of the most indefatigable and prolific members of the socialist party, in a
widely circulated tract, has actually adduced the existence of hawkers' licences as an
instance of the 'progress of Socialism."* — Hubert Bland, in Fabian Essay s, p. 212.
PART I
AN ANALYSIS OF SOCIALISM
CHAPTER I
THE ECONOMIC CONCEPTIONS
The fundamental economic conceptions of Socialism arise
from Karl Marx's theories of value and surplus value, and
culminate in the conception that the income of landowners,
capitalists, and employers alike, with the sole exception of
some reward due to the employer as organiser and director
of industry, are deductions from the wages of individual
labourers, a tribute imposed upon labour.
The following extracts from Marx's great work Capital
give the substance of these theories : —
"That which determines the magnitude of the value
of any article is the amount of labour socially necessary,
or the labour-time socially necessary, for its production.
Each individual commodity in this connection is to be con-
sidered as an average sample of its class. Commodities,
therefore, in which equal quantities of labour are embodied,
or which can be produced in the same time, have the same
value. The value of one commodity is to the value of any
other, as the labour-time necessary for the production of
the one is to that necessary for the production of the other.
As values all commodities are only definite masses of con-
gealed labour-time " (p. 6).^
" The value of labour-power is determined, as in every
other commodity, by the labour- time necessary for the
production, and consequently also for the reproduction, of
this special article. So far as it has value it represents
^ This and tubtequent quotations from Capital are taken from the stereotyped edition.
Swan Sonncnschein and Co. London, 1889.
4 DEMOCRACY VERSUS SOCIAUSM part i
no more than a definite quantity of the average labour of
society incorporated in it. Labour-power consists only as
a capacity or power of the living individual. Its produc-
tion consequently presupposes his existence. Given the
individual, the production of labour-power consists in his
reproduction of himself or his maintenance. For his main-
tenance he requires a given quantity of the means of sub-
sistence. Therefore the labour -time requisite for the
production of labour-power reduces itself to that neces-
sary for the production of these means of subsistence ; in
other words, the value of labour-power is the value of the
means of subsistence necessary for the maintenance of the
labourer" (p. 149).
" The value of a day's labour-power amounts to three
shillings, because on our assumption half a day's labour is
embodied in that quantity of labour-power, i.e. because the
means of subsistence that are daily required for the produc-
tion of labour-power cost half a day's labour. But the past
labour that is embodied in the labour-power, and the living
labour that it can call into action, the daily cost of m^n-
taining it, and its daily expenditure in work, are two totally
different things. The former determines the exchange-
value {i.e. wages) of the labour-power, the latter is its use-
value. The fact that half a day's labour is necessary to
keep the labourer alive during twenty-four hours does not
in any way prevent him from working a whole day.
Therefore the value of labour- power and the value which
that labour-power creates in the labour process are two
entirely different magnitudes, and this difference of the two
values was what the capitalist had in view when he was
purchasing the labour-power" (p. 174).
" The action of labour-power, therefore, not only repro-
duces its own value, but produces value over and above it.
This surplus-value is the difference between the value of
the product and the value of the elements consumed in the
formation of the product ; in other words, of the means ot
production {i.e. material and fractional parts of * fixed
capital') and the labour-power. . . . The means of pro-
duction on the one hand, labour-power on the other, are
merely the different modes of existence which the value of
CHAP. 1 THE ECONOMIC CONCEPTIONS 5
the original capital assumed when from being money it
was transformed into the various factors of the labour-
process. That part of capital which is represented by the
means of production, by the raw material, auxiliary material,
and the instruments of labour, does not in the process of
production undergo any quantitative alteration of value.
. . . On the other hand, that part of capital represented
by labour-power does in the process of production undergo
an alteration of value. It produces the equivalent of its
own value and also produces an excess, a surplus-value,
which may itself vary, may be more or less according to
circumstances" (pp. 191, 192).
*' If we now compare the two processes of producing
value and of creating surplus-value, we see that the latter
is nothing but a continuation of the former beyond a
definite point. If, on the one hand, the process be not
carried beyond the point where the value paid by the
capitalist for the labour-power is replaced by an exact
equivalent, it is simply a process of producing value ; if,
on the other hand, it be continued beyond that point,
it becomes a process of creating surplus - value " (pp.
176, 177).
" Capital has not invented surplus-labour. Wherever
a part of society possesses the monopoly of the means of
production, the labourer, free or not free, must add to the
working time necessary for his own maintenance an extra
working time in order to produce the means of subsistence
for the owners of the means of production, whether this
proprietor be the Athenian /caT^^ Karfa06<;, Etruscan theocrat,
civis Romanus, Norman baron, American slave -owner,
Wallachian boyard, modern landlord or capitalist" (p. 218).
That this same idea of the unjust nature of surplus-
value is entertained, though in slightly altered form, by
the latest exponents of Socialism, in spite of the fact, which
will be proved later on, that some of them repudiate the
foundation on which the Marxian theory is built, — the
labour-theory of value, — ^will be seen from the following
quotation, taken from "Tract No. 69," issued by the
Fabian Society, and written by Mr. Sidney Webb, The
Difficulties of Individualism (p. 7) : —
6 DEMOCRACY VERSUS SOCIALISM part i
" When it suits any person having the use of land and
capital to employ the worker, this is only done on con-
dition that two important deductions, rent and interest,
can be made from his product, for the benefit of two, in
this capacity, absolutely unproductive classes — those ex-
ercising the bare ownership of land and capital. The
reward of labour being thus reduced, on an average by
about one -third, the remaining eightpence out of the
shilling is then shared between the various classes who
have co-operated in the production."
Occupying a place in the economic teaching of Socialism
similar to that of surplus -value, is that of the evil of
industrial competition. Industrial competition, it asserts,
springs from and is inseparable from private ownership
and management of land and capital, and the only possible
method of putting an end to industrial competition and to
the evils which it generates, is to abolish such private
ownership and management.
Two lines of reasoning are put forward in support of
the maleficent influence of competition. The first of
these is based on the limitation of competition. Owing,
it states, to the inevitable tendency of modern machine
production towards the concentration of industry in the
hands of a comparatively small number of powerful in-
dividual capitalists, or associations of capitalists, competi-
tion has become one-sided. These capitalists instead of
competing with each other, form monopolistic combina-
tions to exclude competition between themselves. The
inevitable trend of industrial progress is towards the
extension of such monopolies until they must include
every considerable industry in which machinery is largely
employed.
While, however, the capitalist is thus enabled to shelter
himself from the evil results of competition, the wage-
earners remain exposed to all its horrors. The only
remedy for this one-sided competition is the total aboli-
tion of industrial competition.
Some examples of this line of reasoning will be found
in the following quotations. The first is from the Bible
of Modern "Scientific" Socialism, Karl Marx's Capital^
CHAP. I THE ECONOMIC CONCEPTIONS 7
pp. 788, 789 : "That which is now to be expropriated
is no longer the labourer working for himself, but the
capitalist exploiting many labourers. This expropriation
is accomplished by the action of the immanent laws of
capitalistic production itself, by the centralisation of
capital One capitalist always kills many. . . . Along
with the constantly diminishing number of the magnates
of capital, who usurp and monopolise all advantages of
this process of transformation, grows the mass of misery,
oppression, slavery, degradation, exploitation. . . . The
monopoly of capital becomes a fetter upon the mode of
production, which has sprung up and flourished along
with it, and under it."
The following is an extract from Fabian Essays in
Socialism^ the oflicial publication of the Fabian Society,
London.^ It states, pp. 89, 90 : —
" I now come to treat of the latest forms of capitalism,
the *ring' and the * trust' whereby capitalism cancels
its own principles, and, as a seller, replaces competition by
combination. When capitalism buys labour as a com-
modity it effects the purchase on the competitive prin-
ciple. . . . But when it turns round to face the public as
a seller, it casts the maxims of competition to the winds
and presents itself as a solid combination. Competition,
necessary at the outset, is found ultimately, if unchecked,
to be wasteful and ruinous. . . .
" No doubt the ' consumer ' has greatly benefited by
the increase in production and the fall in prices ; but
where is * free competition ' now i Almost the only per-
sons still competing freely are the small shopkeepers,
trembling on the verge of insolvency, and the working
men competing with one another for permission to live
by work."
The next quotation is taken from John A. Hobson's
The Evolution of Modern Capitalism^ p. 357, a work which
is conceived and executed in a spirit of patient research
and careful analysis, which might serve as an example to
many opponents of Socialism.
^ F^lan Essays in Socialism if a complete exposition of modern English Socialism in
its latest and most mature phase (Sidney Webb, Socialism in England^ p. 38).
8 DEMOCRACY VERSUS SOCIALISM part
" Since the general tendency of industry, so far as it
falls under modern economics of machinery and method,
is either towards wasteful competition or towards mon-
opoly, it is to be expected that there wiU be a continual
expansion of State interference and State undertaidngs.
This growing socialisation of industries must be regarded
as the natural adjustment of society to the new conditions
of machine production."
In addition, it may not be without interest to quote
from the best-known and most widely-circulated work of
an American socialist, Laurence Gronlund's The Co-
operative Commonwealth. Though Gronlund is repudiated
by more modern socialists as fevouring the catastrophic
realisation of their doctrines, they do not materially differ
from him as far as the doctrines themselves are concerned,
and his book is still widely disseminated by socialist
organisations. On pp. 42, 43, and 50, he states : —
" The great weapon at the command cf the capitalist
is competition. ... It deserves the name of cut- throat
competition when the wage -workers are forced into a
struggle to see who shall live and who shall starve. . . .
But these are by no means the only sufferers. The small
employers, the small merchants, are jus: as much victims
of that cruel kind of competition as the wage- workers. . . .
"But our big capitalists have a still more powerful
sledge-hammer than that of competition ready at hand —
to wit, combination. . . . They have already found that,
while competition is a very excellent weapon to use
against their weaker rivals, combination pays far better in
relation to their peers."
While the preceding authorities assert the failure of
competition to remain free and equal under the conditions
of modern industry, and base the proposals of Socialism
on this failure, other authorities base them on the evil of
competition qua competition. They disregard the argu-
ments which arise from one-sided competition and boldly
declare industrial competition jis such to be the cause of
the exploitation and degradation of labour and incompat-
ible with the moral and physical weUbeing of the people.
Thomas Kirkup, one of the most careful and con-
CHAP. I THE ECONOMIC CONCEPTIONS 9
servative of socialist authors, declares in An Inquiry into
Socialism^ p. 94 : —
" So long and so far as the present competitive system
prevails, it must tend to the degradation of the workers,
to social insecurity, and disaster."
W. D. P. Bliss, a well-known American statistician
and writer on economic and industrial subjects, states in
jl Handbook of Socialism^ pp. 18, 20, and 21: —
"Individual competition of manufacturers and em-
ployers compels them to produce as cheaply as possible
in order to sell as cheaply as possible. If they do not
they must go out of business ; for, under free competi-
tion, he who sells a given article the cheapest will get the
trade. Therefore, the manufacturer and producer, com-
pelled to buy in the cheapest market, strive among other
things to buy labour as cheaply as possible. The labourer,
meanwhile, having no good land and no adequate capital,
is compelled to sell his labour-force at the best price he
can. But since men multiply rapidly while land and
capital are limited, and since machinery and invention con-
stantly enable fewer and fewer men to do work formerly
done by many, there soon comes to be competition of
two (or two thousand) men to get the same job. Now
the employer we have seen to be compelled to employ
those who will work cheapest. There thus comes to be
a competition between workmen to see who will work
cheapest, and so get the job. This goes on developing
till wages fall to just that which will support and renew
the lowest form of life, that will turn out the requisite
grade of work.
" Profit sharing, trades unions, partial co-operation,
model tenements, charities, may do a little temporary good,
but are mere bubbles on the ocean of competition ; the
only way is to slowly replace competition by universal
co-operation, which is Socialism.
" Nor would Socialism limit all competition. Com-
petition is not its devil. It recognises good as well as
evil in competition. It would simply abolish industrial
competition."
The Guild of St. Matthew's is an association of socialist
lo DEMOCRACY VERSUS SOCIALISM parti
clerics of the Church of England. In a Memorial ad-
dressed to the Pan-Anglican Conference^ by the Guild,
the following statements occur : —
"Our present social system — if the words * social
system ' can be used for that which is largely the outcome
of anarchic competition — is cruel and dishonest, and
needs drastic reform and radical reorganisation. . . . The
socialist objects to the competitive commercial system
under which we live, that it robs the poor because he is
poor," etc.
While the two lines of reasoning here exhibited differ
materially one from the other, they are not mutually
exclusive. The socialist who objects to private monopoly
may, and does, equally object to the freest and most
untrammelled industrial competition. This is actually
the state of mind prevailing among socialists who other-
wise may widely differ from each other. The mono-
polistic argument is used mainly against the theory that
free competition by itself will cure the evils which beset
our industrial system, in order to show that such free
competition is itself disappearing; while the argument
against competition as such is the one mainly relied upon
to justify the novel industrial proposals of Socialism. The
economic theory of Socialism with regard to competition,
therefore, is that of the destructive and disintegrating
influence of industrial competition as such. The main
difference between Socialism and other non - socialistic
methods of social reform will be found to be that, while
the former condemns competition as such, the latter con-
demn the one-sided and inequitable conditions under
which competition is now carried on, and look forward
to the removal of these unjust conditions and to the
establishment of a really free and equal system of com-
petition — the possibility of which Socialism denies — as
the cure for the fundamental injustice of modern
societies.
These two conceptions, that of the destructive influ-
ence of industrial competition qua competition, and that
^ Report of Pan 'Anglican Cmfirence, London, 1888; Society for Promoting
Christian Knowledge.
CHAP. I THE ECONOMIC CONCEPTIONS 1 1
interest and rent and profit or surplus -value are deduc-
tions from the product, and, therefore, from the legiti-
mate reward of the producers, form the bases of the
industrial proposals of Socialism. The latter are devised
for the purpose of abolishing industrial competition, and
the exaction of rent, and interest, and profit, or surplus-
value as the only measures which can secure to labour its
full and just reward.
CHAPTER II
THE INDUSTRIAL PROPOSALS
Socialists as well as their opponents have, almost exclu-
sively, sought to define Socialism in terms of its industrial
proposals. As a consequence, these proposals have been
set out more frequently, and have been framed in more
definite terms than is the case with socialist principles
generally. Nevertheless, there is no complete agreement
between the authorities, even on this, the central point of
Socialism, though the differences, as will be seen, are not
of suflicient importance to prevent a definite conclusion
being arrived at.
The Social Democratic party of Germany is the most
numerous and influential body of socialists. Their
enunciation of the principles and aspirations which ani-
mate them is, therefore, of suflicient importance to justify
the republication here, in full, of that part of their latest
platform which deals with general principles. It was
framed at the Convention of the party, which took place
at Erfurt in October 1891, and is known as The Erfurt
Programme.
" The economic development of industrial society
tends inevitably to the ruin of small industries, which
are based on the workman's private ownership of the
means of production. It separates him from these means
of production, and converts him into a destitute member
of the proletariat, whilst a comparatively small number of
capitalists and great landowners obtain a monopoly of the
means of production.
" Hand in hand with this growing monopoly goes the
CHAP. II THE INDUSTRIAL PROPOSALS 13
crushing out of existence of these shattered small industries
by industries of colossal growth, the development of the
tool into the machine, and a gigantic increase in the
productiveness of human labour. But all the advantages
of this revolution are monopolised by the capitalists and
great landowners. To the proletariat and to the rapidly
sinking middle classes, the small tradesmen of the towns,
and the peasant proprietors (Bauern), it brings an in-
creasing uncertainty of existence, increasing misery,
oppression, servitude, degradation, and exploitation.
" Ever greater grows the mass of the proletariat, ever
vaster the army of the unemployed, ever sharper the
contrast between oppressors and oppressed, ever fiercer the
war of classes between bourgeoisie and proletariat which
divides modern society into two hostile camps and is the
common characteristic of every industrial country. The
gulf between the propertied classes and the destitute is
widened by the crises arising from capitalist production,
which becomes daily more comprehensive and omnipotent,
which makes universal uncertainty the normal condition
of society, and which furnishes a proof that the forces of
production have outgrown the existing social order, and
that private ownership of the means of production has
become incompatible with their full development and their
proper application.
*' Private ownership of the means of production,
formerly the means of securing his product to the pro-
ducer, has now become the means of expropriating the
peasant proprietors, the artisans, and the small tradesmen,
and placing the non-producers, the capitalists and large
landowners in possession of the products of labour.
Nothing but the conversion of capitalist private ownership
of the means of production — the earth and its fruits,
mines and quarries, raw material, tools, machines, means
of exchange — into social ownership, and the substitution
of socialist production, carried on by and for society, in
the place of the present production of commodities for
exchange, can effect such a revolution, that, instead of
large industries and the steadily growing capacities of
common production being as hitherto a source of misery
14 DEMOCRACY VERSUS SOCIALISM parti
and oppression to the classes whom they have despoiled,
they may become a source of the highest wellbeing and of
the most perfect and comprehensive harmony.
" This social revolution involves the emancipation, not
merely of the proletariat but of the whole human race,
which is suffering under existing conditions. But this
emancipation can be achieved by the working class alone,
because all other classes, in spite of their mutual strife
of interests, take their stand upon the .principle of
private ownership of the means of production, and have
a common interest in maintaining the existing social
order.
" The struggle of the working classes against capitalist
exploitation must of necessity be a political struggle. The
working classes can neither carry on their economic struggle
nor carry on their economic organisation without political
rights. They cannot effect the transfer of the means of
production to the community without being first invested
with political power.
" It must be the aim of social democracy to give
conscious unanimity to this struggle of the working
classes, and to indicate the inevitable goal.
" The interests of the working classes are identical in
all lands governed by capitalist methods of production.
The extension of the world's commerce and production
for the world's markets make the position of the workman
in any country daily more dependent upon that of the
workman in other countries. Therefore, the emancipa-
tion of labour is a task in which the workmen of all
civilised lands have a share. Recognising this, the Social
Democrats of Germany feel and declare themselves at one
with the workmen of every land, who are conscious of the
destinies of their class.
" The German Social Democrats are not, therefore,
fighting for new class privileges and rights, but for the
abolition of class government, and even of classes them-
selves, and for universal equality in rights and duties,
without distinction of sex or rank. Holding these views,
they are not merely fighting against the exploitation and
oppression of the wage-earners in the existing social order,
CHAP. II THE INDUSTRIAL PROPOSALS 15
but against every kind of exploitation and oppression,
whether directed against class, party, sex, or race." ^
It is not without interest, to compare with the Erfurt
Programme that issued by the Social Democratic party of
Germany at their previous Convention at Gotha in 1875, —
The Gotha Programme. The extract from the same,
here republished, deals with both the industrial and dis-
tributive proposals. It will be seen that the latter is
formulated in definite terms, while the Erfurt Pro-
gramme^ though of later date, is judiciously silent with
regard to it : —
** Labour is the source of all wealth and of all culture,
and, as useful work in general is possible only through
society, so to society — that is to all its members — belongs
the entire product of labour by an equal right, to each one
according to his reasonable wants, all being bound to work.
" In the existing society the instruments of labour are
a monopoly of the capitalist class ; the subjection of the
working class thus arising is the cause of misery and servi-
tude in every land.
" The emancipation of the working class demands the
transformation of the instruments of labour into the
common property of society and the co-operative control
of the total labour, with the application of the product of
labour to the common good, and just distribution of the
same."
The Social Democratic Federation (England) states its
objects to be : —
" The socialisation of the means of production, distri-
bution and exchange, to be controlled by a democratic
state in the interests of the entire community, and the
complete emancipation of labour from the domination of
capitalism and landlordism, with the establishment of social
and economic equality between the sexes."
The following extract is taken from the Manifesto
issued by the Joint Committee of Socialist Associations in
England. As a united expression of the principles and
aims of socialists it has therefore authoritative value : —
" There is a growing feeling at the present time that,
^ Profettor Ely's translation. Socialism,
1 6 DEMOCRACY VERSUS SOCIALISM parti
in view of the increasing number of socialists in Great
Britain, an effort should be made to show that, whatever
differences may have arisen between them in the past, all
who can fairly be called socialists are agreed in their main
principles of thought and action. . . .
" On this point all socialists agree. Our aim, one and
ail, is to obtain for the whole community complete owner-
ship and control of the means of transport, the means of
manufacture, the mines and the land. Thus we look to
put an end for ever to the wage-system, to sweep away all
distinctions of class, and eventually to establish national
and international communism on a sound basis."
The Chicago Convention (1889) ^^ "The Socialist
Labour Party of the United States " issued a programme
containing the following expression of its aims : —
" With the founders of this republic we hold that the
true theory of politics is that the machinery of government
must be owned and controlled by the whole people ; but
in the light of our industrial development we hold, further-
more, that the true theory of economics is that the
machinery of production must likewise belong to the
people in common."
While the Chicago Convention, being mainly repre-
sentative of foreign socialists in the United States, cannot
claim to speak for native American socialists, it is differ-
ent with the recently organised "Social Democracy of
America." This association, organised by and for
Americans, and which, six months after its inception,
claimed to already exceed in membership all other socialist
bodies in the United States, has formulated its industrial
proposals as follows : —
" To conquer capitalism by making use of our political
liberty and by taking possession of the public power, so
that we may put an end to the present barbarous struggle,
by the abolition of capitalism, the restoration of the land,
and of all the means of production, transportation, and
distribution, to the people as a collective body, and the
substitution of the co-operative commonwealth for the
present state of planless production, industrial war, and
social disorder. . . . The social democracy of America
CHAP. II THE INDUSTRIAL PROPOSALS 17
will make democracy * the rule of the people ' a][truth by
ending the economic subjugation of the overwhelmingly
great majority of the people."
The socialists of France are split up into many parties,
differing mainly with regard to the methods — more or less
revolutionary — by which their objects are to be attained.
There does not, however, seem to exist any difference
between them regarding their industrial object, which, as
far as can be ascertained, is identical with that of their
strongest body, the " Parti Ouvrier Socialiste Revolu-
tionnaire Frangais." The programme of the latter contains
the following declaration : —
** To place the producer in possession of all the means
of production — ^land, manufactures, ships, banks, credit,
etc., and, as it is impossible to divide these things among
individuals, they must be held collectively."
In addition to these, the most authoritative declara-
tions, because emanating from organised Socialism, some
definitions of like character, supplied by prominent
socialists and by one of their most eminent opponents, may
also be cited.
The first of these is the definition supplied by Dr*
A. von Schaeffle. Though Dr. Schaeffle is a State
socialist, and as such an opponent of organised Socialism,
his definition has been received with almost general
approval by socialists as well as others. The final part of
the definition, which deals with distribution, must however
be accepted with caution, inasmuch as it will be shown
presently to be incorrect, and that the error has since
been recognised by Dr. Schaeffle himself : —
" To replace the system of private capital (i.e. the
speculative method of production, regulated on behalf of
society only by the free competition of private enterprises)
by a system of collective capital — that is, by a method of
production which would introduce a unified (social or
* collective ') organisation of national labour, on the basis of
collective or common ownership of the means of production
by all the members of the society.
" This collective method of production would remove
the present competitive system, by placing under official
1 8 DEMOCRACY VERSUS SOCIALISM parti
administration such departments of production as can be
managed collectively (socially or co-operatively) as well as
the distribution among all of the common produce of all,
according to the amount and social utility of the productive
labour of each." ^
The two following definitions are taken from leading
socialist writers : —
W. D. P. Bliss — "Socialism is the fixed principle
capable of infinite and changing variety of form, and only
gradually to be applied, according to which the community
should own land and capital collectively and operate them
co-operatively for the equitable good of all." ^
William Clarke — '* A socialist is one who believes that
the necessary instruments of production should be held
and organised by the community instead of by individuals,
within or outside of the community." *
In spite of the variety of expressions used, it will be
manifest that all the preceding declarations concur in
describing the industrial proposals of Socialism to be : —
The transfer to the community of both the ownership and
management of all the land, and the means of production,
without any exception whatsoever. Schaeflle alone makes
a limitation, which, however, is meaningless, viz. — "as
can be managed collectively." For it is obvious that
every department of production can be managed collect-
ively, when the question of relative advantage or conse-
quences is left out of account, as is done by Schaeflle.
Even a critic whose sympathies are largely on the side of
Socialism — Professor R. T. Ely — makes the following
comment on this part of Schaeflle's definition : — " Perhaps
it is defective in the statement that Socialism proposes to
place under oflicial administration such departments of
production as can be managed collectively, without stating
directly that Socialism maintains the possibility of a col-
lective management substantially of all production."*
Moreover, in so far as the preceding declarations form
part of the programmes of organised Socialism, they
possess authority exceeding that of minor socialist bodies,
* The S^uintessence of Socialiartj p. 3. - j4 Handbook of Socialism, p. 9.
' Political Science Quarter l^, December 1888. ^ Socialism, p. 20.
CHAP. II THE INDUSTRIAL PROPOSALS 19
or of individual authors, however eminent, and whether
they are socialists or not. Nevertheless, in order to
obtain a full grasp of this question, it is necessary to
consider also declarations and definitions which, in one
way or another, seem to place limits upon the state-
ownership and management of industries demanded by
Socialism.
The most important of these is the prospectus of the
Fabian Society of Socialists — an association which counts
among its members not only the most cultured of English
socialists, but many men and women whose character,
abilities, and attainments have secured for them distin-
guished positions in the world of literature, science,
politics, and commerce : —
" The Fabian Society consists of socialists. It there-
fore aims at the reorganisation of society by the emanci-
pation of land and industrial capital from individual and
class ownership, and the vesting of them in the community
for the general benefit. In this way only can the natural
and acquired advantages of the country be equitably
shared by the whole people. The Society accordingly
works for the extinction of private property in land, and
of the consequent individual appropriation, in the form
of rent, of the price paid for permission to use the earth,
as well as for the advantages of superior soils and sites.
" The Society, further, works for the transfer to the
community of the administration of such industrial capital
as can conveniently be managed socially. For, owing to
the monopoly of the means of production in the past,
industrial inventions, and the transformation of surplus
income into capital, have mainly enriched the proprietary
class, the worker being now dependent on that class for
leave to earn a living.
" If these measures be carried out without compensa-
tion (though not without such relief to expropriated
individuals as may seem fit to the community), rent and
interest will be added to the reward of labour, the idle
class now living on the labour of others will necessarily
disappear, and practical equality of opportunity will be
maint^ned by the spontaneous action of economic forces
20 DEMOCRACY VERSUS SOCIALISM part i
with much less interference with personal liberty than the
present system entails.
" For the attainment of these ends the Fabian Society
looks to the spread of socialist opinions, and the social
and political changes consequent thereon. It seeks to
promote these by the general dissemination of knowledge
as to the relation between the individual and society in its
economic, ethical, and political aspects." ^
The limitation here insisted upon — "such industrial
capital as can conveniently be managed socially " — is an
advance, though a slight one, upon Schaeffle, and by no
means definite. It receives, however, a further extension
at the hands of Mr. Sidney Webb, a prominent member
of the Fabian Society, in the following definition : —
" On the economic side. Socialism implies the collective
administration of rent and interest, leaving to the indi-
vidual only the wages of his labour, of hand or brain.
On the political side it involves the collective control
over, and ultimate administration of, all the main instru-
ments of wealth production. On the ethical side it
expresses the real recognition of fraternity, the universal
obligation of personal service, and the subordination of
individual ends to the common good." ^
The definition here given — " the main instruments of
wealth production " — is decidedly more definite than that
supplied by the prospectus of the Fabian Society, but still
errs on the side of ambiguity. Its meaning, however, is
explained by another member of the Fabian Society — Mr.
Graham Wallas — in an official publication, Fabian Essays
on Socialism. He defines it as " all those forms of pro-
duction, distribution, and consumption which can con-
veniently be carried on by associations larger than the
family group." As Mr. Wallas's definition is valuable
on other accounts as well, it is cited here in extenso : —
" There would remain, therefore, to be owned by the
community the land in the widest sense of the word, and
the materials of those forms of production, distribution,
and consumption which can conveniently be carried on by
associations larger than the family group. . . .
^ Sidney Webb, SocialitM in England, pp. 12, 13. ^ Socialism in England, p. 10.
CHAP. II THE INDUSTRIAL PROPOSALS 21
"The postal and railway systems, and probably the
materials of some of the larger industries, would be owned
by the English nation until that distant date when they
might pass to the united states of the British Empire or
the Federal Republic of Europe. Land is perhaps gener-
ally better held by smaller social units. ... At the same
time, those forms of natural wealth which are the neces-
sities of the whole nation and the monopolies of certain
districts — mines for instance, or harbours, or sources of
water-supply — must be ' nationalised.' . . .
" The savings of individuals would consist partly ot
consumable commodities, or of the means of such industry
as had not been socialised, and partly of deferred pay for
services rendered to the community, such pay taking the
form of a pension due at a certain age, or of a sum of
commodities or money payable on demand." ^
While Mr. Wallas's explanation leaves little to be
desired in the way of definiteness, it, on the other hand,
shows that the limitation advocated by the Fabian Society
is a verbal one only. For the industrial activities which
cannot be " conveniently carried on by associations larger
than the family group " are few and insignificant. The
industry of sewing new buttons to an old shirt may
conceivably fall under this head ; but the mending of the
family socks, washing the family linen, and cooking the
family dinner may easily be held to fall within this de-
finition, and many socialists regard them as peculiarly
the object of State management.* In any case all pro-
duction, the produce of which exceeds the requirements of
the producing family, i.e. all production for exchange, is
manifestly covered by this definition.
Moreover, the Fabian Society has itself repented of
the slight limitation introduced in its prospectus. For at
a subsequent date to that on which this document was
issued, it became one of the signatories to the Manifesto
issued by the Joint-Committee of Socialist Associations,* and
which declares : " On this point all socialists agree. Our
aim, one and all, is to obtain for the whole community
^ Fab'um Essay s^ p. 135.
' Vide Looking Backwcrds^ etc. ' Ante, P* '5*
22 DEMOCRACY VERSUS SOCIALISM part i
complete ownership and control of the means of transport,
the means of manufacture, the mines, and the land."
Similarly, Mr. Sidney Webb has in a later work, Pro-
blems of Modem Industry ^ abandoned the slight limitation
on collective ownership and control previously introduced
by him, as the following quotation shows : —
" We are trying to satisfy the ordinary man . . . that
the main principle of reform must be the substitution of
collective ownership and control for individual private
property in the means of production."^
On all these grounds the conclusion is inevitable, that
there is no appreciable difference between the aim of the
Fabian Society and that of other socialist associations in
the direction of State ownership and management, and that
these comprise the land and every form of capital. Further
inquiry will prove that any limitation of this programme
is incompatible with the method of distribution which the
Fabian Society or any other socialist body aims at, as also
with that " abolition of industrial competition " to which
all socialists are pledged.
Moreover, the continuance of any private industry for
exchange, however insignificant the volume of its products
may be, is incompatible with the abolition of "Private
Interest," which, as has been shown, is one of the fore-
most objects of Socialism. The following quotation proves
that socialists, even Fabian socialists, fully admit this
fact : —
" To whatever extent private property is permitted, to
that same extent the private taking of rent and interest
must be also permitted. If you allow a selfish man to
own a picture by Raphael, he will lock it up in his own
room unless you let him charge something for the privilege
of looking at it. Such a charge is at once interest. If
we wish all Raphael's pictures to be fully accessible to
every one, we must prevent men not only from exhibiting
them for payment, but from owning them."^
Whether the charge dealt with in the foregoing quota-
tion is rightly described as interest or not, it is clear that
^ S. and B. Webb, Prcblems of Modern Industry, p. 259 (1898).
^ Fabian Essay s, p. 139.
CHAP. II THE INDUSTRIAL PROPOSALS 23
the argument applies with equal force to pictures by living
masters. When such a picture is exhibited by its author
against an entrance fee, the charge bears the same economic
character as that made by a speculator for viewing the
work of a dead master. Likewise, if it is desirable that
" Raphael's pictures be fiilly accessible to every one," it is
equally desirable with regard to modern pictures of ex-
cellence. " Men must be prevented from owning them '*
also. Therefore, in the opinion of this Fabian essayist,
the production of paintings and other works of art for sale
or exhibition must be placed under State management.
Nor can the logic of this contention be easily disputed by
other socialists.
It is equally certain that professional services cannot be
permitted to be performed on private account. Although
the industrial proposals of Socialism do not necessarily
involve such a change, its distributive proposals do involve
it. In order that they may be carried out, all professional
men must be employees of the State, rendering their
services gratis or against a charge which must be paid, not
to them, but into the revenue of local or central govern-
mental bodies. This subject, as well as that of domestic
service, literature, and science, can, however, be more con-
veniently considered when the distributive proposals of
Socialism are under examination.
CHAPTER III
THE INDUSTRIAL PROPOSALS — Continued
The preceding examination has made it manifest that, in
spite of the appearance of limitation in some socialist
utterances, there exists a practical agreement between all
socialists, which will be seen to be dictated by other
principles held by them in common, requiring the sociali-
sation of all industries the products of which enter the
circle of exchanges.
The industries thus excluded are, however, so trivial
that they may conveniently be disregarded in any
definition. There remain, however, some direct con-
sequences of the above proposals to be considered before
such a definition can be made.
The first of these is the method by which Socialism
proposes to acquire the ownership of land and capital.
The prospectus of the Fabian Society states : —
" If these measures be carried out without compen-
sation (though not without such relief to expropriated
individuals as may seem fit to the community), rent and
interest will be added to the reward of labour.*' ^
The Fabian Essays supply even more definite
information, viz. — "The progressive socialisation of
land and capital must proceed by direct transference of
them to the community through taxation of rent and
interest and public organisation of labour with the capital
thus obtained." *
The above statements are the more valuable because
the exponents of Socialism are generally more than
* Sec ante^ P* I9» ' P. 140.
CHAP. Ill THE INDUSTRIAL PROPOSALS 25
reluctant to give clear expression to their intention on
this subject. Taken by themselves — the context in no
way alters their meaning — they would, however, lead to
the conclusion that Socialism relied upon taxation alone
for the establishment of its industrial system. That,
however, is impossible. For if the State appropriates by
taxation more than its current expenditure requires, it
cannot keep the ever-increasing fund idly locked up in
some vault. " The public organisation of labour with the
capital so obtained" must proceed pari passu with its
acquisition, in order that the gradual transformation
from private to public industry may be realised. There
are only two ways in which this can be done, viz. by
the creation of new establishments through the purchase
of land, machinery, and material, or through the purchase
of already existing private establishments.
At first, no doubt, the former process would be
largely employed. As, however, increasing taxation
results in a reduction of private profit, of rent, and
of the value of land, and as the competition of untaxed
State establishments reduces still further the value of
fixed capital engaged in private enterprises, private
industrial establishments could be purchased so cheaply
that the second method would prevail. Such land as the
State required would of course always be acquired by
purchase at rates constantly falling with the increase of
taxation. In this way the land and the capital would
become the property of the community apparently with-
out confiscation. In reality, however, no compensation
would have been paid. For the owners themselves
would furnish the compensation fund ; and the amount
received by them as compensation could not exceed
the amount paid by them in special taxation. Some
of them would receive more than their contributions,
but only on condition that others received less than
theirs.
Another method of transference is suggested by Mr.
Laurence Gronlund in the following terms : —
" We shall here make a digression to state definitely
our position in regard to compensation to the dispossessed
I
26 DEMOCRACY VERSUS SOCIALISM part i
owners of property which we left somewhat unsettled in
the last chapter.
**We suggested there that if the final change were
accomplished by force, the State would possibly expro-
priate our men of wealth without compensation whatever.
Their existing rights are such which the law gives^ and
what the law gives the law can take away. That would
be done without any compunction of conscience, seeing
that much of that wealth is obtained by questionable
methods, and very much of it by the trickery of buying
and selling, which never can create value. . . . But as a
matter of policy the State may see fit to give the pro-
prietors a fair compensation for that property which Society
takes under its control, i,e. for its real and not its specu-
lative value. But there are two important * buts ' to note.
They will not receive any interest on the sums allowed them.
When all interest has ceased to be legitimate throughout
society, society will hardly charge itself with that burden.
" They will not be paid in money ^ but in goods, in articles
of enjoyment furnished in annuities to those whose claim
is sufficiently large." ^
This statement shows that Gronlund is a catastrophic
socialist, a survival of the past. Nevertheless, his proposal
is worthy of examination, as being the only alternative to
that of the Fabian Society, if the transfer is to be made
gradually. For, though Gronlund considers it under the
supposition of a sudden transformation of the existing
into a full-blown socialistic system, it might be applied to
a gradual transmutation.
I The State might establish new or purchase existing
industrial enterprises with bonds, and might gradually
extend this process till all land and private industrial
capital had passed into its possession. If the bonds were
made interest-bearing and if the profit from State-con-
ducted industries were sufficient to pay the interest, the
compensation would so far be real. If, however, the
profit were insufficient, a contingency which cannot be
disregarded, taxation of land and capital would have to be
resorted to, to the extent of the deficiency. In such case
' A Co-operative Commomvealth^ pp. 135, 136.
i
CHAP. Ill THE INDUSTRIAL PROPOSALS 27
the owners of land and capital would, to the same extent,
provide their own compensation as in the plan advocated
by the Fabian Society.
In either case, however, the payment of interest could
not be continued beyond the close of the transition period
without a denial of the fundamental principles of Socialism.
The bonds would then be repaid in the manner described
by Gronlund, in annual instalments of consumption-goods,
till the whole of the debt was extinguished. The pro-
spective cessation of interest payments would, however,
result in a gradual depreciation of the bonds, which
would reach its maximum at the actual termination of
the former.
On the other hand, it is also possible to make the
bonds non-interest-bearing from the first, and still subject
to gradual extinction by delivery of consumption-goods.
In this case the bonds would be at a great discount from
the beginning.
Whichever of these two systems were adopted, it is
certain that many if not all the bonds would change
hands during the period of their currency. The question
would therefore be raised, whether the State should pay
in full for bonds which had been acquired by their actual
possessors at much reduced values ; nor can there be any
doubt how it would be answered.
Gronlund's plan, therefore, while some improvement
on that of the Fabian Society from the point of view of
landowners and capitalists, is no very great improvement
even if it were practicable. The probability, however, is
greatly in favour of a mixed system being adopted at the
dictates of political expediency. If the socialists are
strong enough to induce the State to enter upon the
conduct of competitive industries, they will also have
sufficient influence to impose special taxation upon land
and capital. They may, however, easily be induced to
extend the system of State -industry beyond the limits
of the capital which such taxation would place at their
disposal, and this could only be done by the issue of
interest-bearing bonds. It is, however, inconceivable that
these bonds would be made exempt from the taxation
28 DEMOCRACY VERSUS SOCIALISM part i
imposed on all other forms ot wealth, and the bond-
holders would therefore furnish their own interest to an
extent which, ultimately, would amount to the whole
interest. Whichever plan, therefore, may be adopted,
the compensation paid would fall far short of the value
of the property appropriated, even short of that greatly
reduced vaJue caused by State -competition or by State-
competition combined with special taxation. Socialism,
therefore, has no choice ; it must rely mainly on con-
fiscation for the gradual transformation of private industry
into collective industry.
Attention must now be directed to some of the con-
sequential changes in the existing industrial and financial
organisation which are implied in the socialisation of land
and capital.
It involves the abolition of all indirect sources of
private income and of the entire system of public and
private credit as we know it. The taxation of incomes,
gradually increasing, would ultimately absorb the interest
of all state and municipal indebtedness, which then might
be extinguished in the manner already described. Private
credits, the interest from which would be taxable in the
same manner, could not continue under a system in
which the State would borrow and lend without interest,
as will be described presently.
Private exchange, both wholesale and retail, would
equally disappear, giving way to State -conducted ware-
houses. These indirect consequences involved in the
realisation of the industrial proposals of Socialism are aptly
described by Dr. Schaeffle in the following terms : —
"The principle of Socialism is thus opposed to the
continuance not only of private property in directly
managed means of production (that is, in private business
and joint-stock and other associations of capital), but also
of individual ownership in indirect sources of income;
i.e. to the entire arrangement of private credit, loan, hire,
and lease — not only to private productive capital, but also
to private /(?<?« -capital. State credit and private credit,
interest-bearing capital and loan-capital, are incompatible
with the socialistic state. Socialism will entirely put an
CHAP. Ill THE INDUSTRIAL PROPOSALS 29
end to national debts, private debts, tenancy, leases, and
all stocks and shares negotiable at the bourse. . . .
Socialism, from its premises, can no longer allow trading
and markets, and it would be necessary even for coinage
eventually to cease to exist and for labour-money (certifi-
cates of labour) to take its place. ... If we suppose the
production by private capitalists to be removed, and a
unified, organised common-production in its place, buying
and selling, competition and markets, prices and payment
by money are at once superfluous. JVithin the socialised
economic organisation they are even impossible."^
With a slight limitation, regarding public credit, which
will be dealt with presently, this passage exhibits with
much acumen some of the indirect consequences which
necessarily must flow from the public assumption of
ownership and management of land and capital.
The socialisation of land and capital further implies their
being vested in and managed by some constituted authority
or authorities. Socialism proposes to vest such authority,
as far as possible, in local governmental bodies, i.e. muni-
cipalities, county councils, etc., and to confide to the
direction of the central government as few of the socialised
industries as possible. It must, however, be recognised
that the limits of local control are drawn in a narrow circle
by the nature of industries. Purely local industries,
i.e. industries the products of which are destined for local
consimiption alone, may be so managed with safety, as
supply of water, gas, electricity, hydraulic and pneumatic
power, as also local means of transport, as cabs, omnibuses,
and tramways. Villages and very small towns might also
undertake the local production and distribution of bread,
meat, milk, and some other quickly perishable articles,
though even in these instances complications from the
overlapping of authorities could scarcely be avoided.
Large towns and cities, which draw their supplies, even
of these quickly perishable articles, from wide areas, could
not possibly undertake even these limited functions. On
the other hand, all those industries which produce easily
transportable goods, as well as those means of transport
^ Thi Sluintessence ofSocialitm^ pp. 64, 69, 70.
30 DEMOCRACY VERSUS SOCIALISM part i
which extend beyond local limits, must, by their very
nature, be managed by one central authority, as agriculture,
mining, manufactures, and the wholesale distribution of
their products, as well as railways, rivers, canals, and
shipping. The reason is obvious. The production of
such industries must be kept in harmony with the require-
ments of the community. In the absence of the com-
petitive organisation this object can only be attained
through an administration embracing and controlling the
whole field of their production. These considerations
make it clear that, with few and comparatively unim-
portant exceptions, the management of socialised industries
must be vested in the central government.
The authority which manages any industry must also
control the labour employed in it. The conduct of all
industries by the State further imposes upon the State the
duty to either find full employment for all its members at
all times, or to provide full incomes, without any return in
labour, during such times, if any, when employment can-
not be found for all. Therefore the managing authority
must possess power to appoint for each citizen the, kind of
labour to which he is to devote himself, as wcu as the
locality where his labour will be of the greatest service.
Only by rigorously shifting labourers from an occupation
and a place in which they have become superfluous, to
occupations and places where their labour is required, can
the requirements of the community be harmoniously
supplied, and the simultaneous over-production of some
goods and under-production of other goods be prevented.
Stress must once more be laid on the fact that Social-
ism does not contemplate the abolition of all private
property, but only of private property in land and capital.
That part of the annual product of the national labour
and industry which is not required for the replacement,
improvement, and extension of national capital, would be
distributed among individuals in the shape of consumption-
goods, and would become private property. Private
ownership in consumption-goods would, therefore, continue
in the socialised State. Nor is there any compulsion on
individuals to abstain from saving. They could do so
CHAP. Ill THE INDUSTRIAL PROPOSALS 31
either by collecting durable consumption -goods in their
own homes, or by withdrawing from the common fund a
smaller amount of goods than they are entitled to, so as to
accumulate a reserve on which they could draw at future
times. Similarly, the State might advance consumption-
goods to citizens on the security of their future labour
contributions. The State, and this is the slight limitation
on Dr. Schaeffle's pronouncement already alluded to,^could
thus, consistently with the principles of Socialism, become
the debtor and creditor of individuals, provided no interest
were paid or charged, though such a course, as will be
shown in Part IL, would give all the advantages of interest
to the borrowers. Private loans, except in so far as they
were prompted by charity, would absolutely cease, because it
would be safer to allow savings to accumulate with the
Government, than, in the absence of interest, to entrust
them to some individual whose credit with the Government
was exhausted.
Rent of building sites would be paid, but would be
payable to the Government. For it would be manifestly
unjust to allot to some persons the best and most con-
venient building sites, while others must be satisfied with
inferior ones, without the exaction of an equivalent for
the enjoyment of the superior advantage. The equality
at which Socialism aims, therefore, requires the continu-
ance of such rent-payments — a fact admitted by some.^
On the other hand, rent for agricultural land, mines,
factory sites, and other natural opportunities of industry,
would apparently disappear, the State being, with regard
to them, tenant as well as landlord.
The foregoing examination enables us to formulate
a definition, perhaps not absolutely comprehensive, yet
sufficient for all practical purposes, of what is implied in
the industrial proposals of Socialism, viz. : —
Socialism aims at the gradual abolition of private
property in and private control of the instruments and
1 (t
A Socialist State or municipality will charge the full economic rent for the use
of its land and dwellings, and apply that rent for the purposes of the community." —
S. B. Webb, Prohiems of Modem Industry^ p. 278. The necessity or even consistency of
charging rent of "dwellings," i.e. interest, is not apparent.
32 DEMOCRACY VERSUS SOCIALISM part r
materials of production, land/ transportation, trade, loan-
capital, and public debts ; such abolition to take place
without compensation, or through partial compensation
only, of present proprietors as a whole. For these private
rights it would substitute the collective ownership and
management by the community, acting through local or
centr^ governmental bodies, of the instruments and
materials of production, land, transportation, trade, and
loans, continuing private property in and private control
of all consumption-goods awarded to individuals as their
share of the industrial product.
^ The term ** land " as used here and subsequently includes agricultural land^,
building sites, mines, waterfalls, and all other natural opportunities.
CHAPTER IV
THE ETHICAL CONCEPTIONS
The conception which Socialism has formed with regard to
the relations existing between individuals and the social
entity to which they belong, is totally opposed to that
formed by Liberalism and Democratic Radicalism, and is
practically identical with that prevailing under the despotism
of the post-reformation period.^ Apart from socialists, it
is, at the present time, to be found only among the belated
survivals of that period, who march in the rear of English
Toryism, or compose the junker-parties of Germany and
Austria.^
It consists in the denial of the existence of abstract or
natural human rights, and its converse, the assertion that
all individual rights are derived from the State, as well as
in the logical deduction from these premises, that any
^ ^ All that it found within the limits of our State belongs to us by the same title.
Yon may rest assured that kings have the right of full and absolute disposition over all
the property possessed by the clergy as well as the laity, to use it at all times with wbe
economy, that is, according to the general necessity of the State." — **Memoire8 de Louis
XIV. pour r instruction dn Dauphin," Yves Guyot, La Frofr'iM.
^ The Liberty of the subject lieth, therefore, in those things which, in regulating
their action, the sovereign hath praetermitted. . . . Nevertheless, we are not to under-
stand that by such liberty, the sovereign power of life and death is either abolished, or
limited. For it hath already been shown that nothing the sovereign representative can
do to a subject on what pretence soever can properly be called injustice or injury ; . • .
and the same holdeth also in a sovereign prince that putteth to death an innocent
subject. For though the action be against the law of nature, as being contrary to equity,
•s was the killing of Uriah, by David, yet it was not an injury to Uriah, but to God." —
«*The English Works of Thomas Hobbes," by Sir William Molesworth, Bart., vol. iii.
LetfiasAati, pp. 99, 100.
' ** Be it that there are natural rights — that is, in a state of nature, where there
» nothing artificial. But men have formed themselves into a social state ; all is
artificial and nothing merely natural. In such a state no rights ought to exist but
what are for the general good — all that are should." — Lord Bramwell, Land and
Csfkal, The Pseudo-Scientific Theory ofMen*s Natural Rights, W. H. lAtsWocky Studies of
Cmtem f mmj Superstitions,
D
34 DEMOCRACY VERSUS SOCIAUSM part i
and all such rights may jusdy be cancelled by the State, if
the latter is of opinion that its interests will be served
thereby.
Thus Sidney Webb, in Socialism in England^ states,
p. 79 : "A wide divergence of thought is here apparent
between England and the United States. In England the
old a priori individualism is universally abandoned. No
professor ever founds any argument, whether in defence
of the rights of property or otherwise, upon the inherent
right of the individual to his own physical freedom and
to the possession of such raw material as he has made his
own by expending personal effort upon. The first step
must be to rid our minds of the idea that there are any
such things in social matters as abstract rights " {The State
in Relation to Labour y chap. i. p. 6, by the late W. Stanley
Jevons). . . . "The whole case on both sides is now made to
turn exclusively on the balance of social advantages."
Laurence Gronlund formulates the theory as follows, in
The Co-operative Commonwealth^ pp. 82, 83, and 85 : —
" It " (the conception of the State as an organism),
'* together with the modern doctrine of evolution as applied
to all organisms, deals a mortal blow to the theory of
* man's natural rights,' the theory of man's inalienable
right to life, liberty, property, happiness, etc. . . . These so-
called * natural rights ' and an equally fictitious ' law of
nature ' were invented by Jean Jacques Rousseau. Philo-
sophic socialists repudiate that theory of ' natural rights.*
It is Society, organised Society, the State, that gives us all
the rights we have, ... As against the State, the organised
Society, even Labour does not give us a particle of title to
what our hands and brain produce."
In addition to these socialist authorities, an opponent
of authority may also be cited. Professor Robert Flint,
who states in Socialism ^ P- 373 • —
" It " (Socialism) " denies to the individual any rights
independent of Society ; and assigns to Society authority
to do whatever it deems for its own good with the persons,
faculties, and possessions of individuals."
r This denial of individual rights within the Society and
, independent of that Society, naturally has, as correlative.
CHAP. IV THE ETHICAL CONCEPTIONS 35
the conception, that the State does not exist for the benefit
of the individuals composing it, at any given time ; that
it is an independent organism, possessing an entity and
purpose of its own, and that therefore the will, not only
of any one individual, but of all individuals, is subordinate
to the will of the State. Thus, again quoting from Soci-
alism in England^ pp. 82, 83, Sidney Webb states : —
" The lesson of Evolution, at first thought to be the
apotheosis of anarchic individual competition, is now recog-
nised to be quite the contrary. . . . Even the Political
Economists are learning this lesson, and the fundamental
idea of a social organism paramount over and prior to the
individual of each generation is penetrating to their minds
and appearing in their lectures."
Laurence Gronlund's exposition of the theory is too
lengthy for quotation in full ; the concluding sentences
{The Co-operative Commonwealth^ P- 81) read: —
" We therefore insist that the State is a living organ-
ism, diflFering from other organisms in no essential respect.
This is not to be understood in a simply metaphorical
sense ; it is not that the State merely resembles an
organism, but that it — including with the people, the land
and all that the land produces — ^literally is an organism^
personal and territorial.
" It follows that the relations of the State, the body
politic, to us, its citizens, is actually that of a tree to its
ceUs, and not that of a heap of sand to its grains, to which
it is entirely indiflFerent how many other grains of sand are
scattered and trodden underfoot.
" This is a conception of far-reaching consequence."
The consequences which Gronlund draws from this
conception are exhibited in the preceding quotation from
his work. That they are far reaching cannot be denied.
It would be inopportune, at this stage of our inquiry, to
examine them or to criticise these conceptions themselves.
All that can conveniently be done here, is to show that
these ideas form part of the " scientific " synthesis which
Socialism claims as its foundation.
It is, however, necessary to point out that this con-
ception of the relations between the State and the in-
36 DEMOCRACY VERSUS SOCIALISM part i
dividuals composing the State is not adopted arbitrarily
by the authorities which have been quoted. It is a
necessary consequence of the basic conceptions as well as
of the industrial and distributive proposals of Socialism.
For the admission of individual rights, prior to and in-
dependent of the State, would stamp these proposals as in
the highest degree unjust and despotic. Their defence,
\ on the ethical side, cannot, therefore, be undertaken except
on the supposition that no such rights exist, and that all
human rights emanate from and are dependent upon the
arbitrary will of the State.
To the labourer belongs the fruit of his toil, is
generally regarded as the only ethical standard of economic
justice. Socialism utterly denies the truth of this proposi-
tion, and teaches that the fruits of individual labour belong,
not to the labourer, but to the society of which he forms
part, to be used by it in such manner as may, in its
opinion, promise the best social results. Citing again
Laurence Gronlund, we find the following clear and
emphatic statement of this conception on p. 145 of The
Cooperative Commonwealth : —
" A man is entitled to the full proceeds of his labour
against any other individual, but not against society. Society
is not bound to reward a man either in proportion to his
services, nor yet to his wants, but according to expediency ;
according to the behests of her own welfare. Man's work
is not a quid pro quOy but a trusts
This doctrine is based on several different and com-
plementary lines of reasoning. One, mechanical, derives
communistic proprietary rights from the far-reaching
co-operative processes of modern industry, rendering it
impossible to discover which part of any finished product
and what share in its value owes its existence to the
labour of any individual co-operator, and posits that it is
equally impossible to assign to any of them equitable
proprietary rights in any part, or in the value of such
product. Thus W. D. P. Bliss, in A Handbook of
Socialism^ p. 188, states : —
" Nor can the principle that capital should be private
property, because it is the work of man, be allowed in
CHAP. IV THE ETHICAL CONCEPTIONS 37
equity, since it is practically impossible to say what man
produced any given portion of capital. All successful
production to-day, mental and manual alike, is the result
of social processes so intricate that it is impossible to
measure the share in the production taken by any one
man." Says Edward Bellamy : " Nine hundred and ninety-
nine parts out of the thousand of every man's produce are
the result of his social inheritance and environment."
While this argument is mainly directed to prove the
impossibility of allotting to each labourer the fruits of his
toil, another boldly asserts its inequity. Taking the
theories of evolution and of value for its basis, it asserts
that individual capacity and industry are the result of
heredity, arising from the ancestral struggle for existence.
Being thus the result of social causes, their product belongs
to Society, and not to the individual who accidentally
possesses them. Allied to this is the further conception,
that the value of any labour product, arising not from the
act of the producer, but from the desires of the consumers,
i.e. from a social cause, such value cannot equitably belong
to the producer, but only to Society as a whole.
Still another line of reasoning deduces social ownership
of labour products from the influence of the social en-
vironment, both on the labourer and the produce of his
labour.
The following quotations show examples of these
several and cognate arguments. Sir Henry Wrixon
attributes to Sidney Webb the following statement
{Socialismy p. 83) : —
"The socialists would nationalise both rent and in-
terest, by the State becoming the sole landowner and
capitalist. . . . Such an arrangement would, however,
leave untouched the third monopoly, the largest of them
all, the monopoly of business ability. The more recent
socialists strike, therefore, at this monopoly also, by allot-
ting to every worker an equal wage whatever the nature of
the work. This equality has an abstract justification, as
the special ability or energy with which some persons are
born is an unearned increment due to the struggle for
existence upon their ancestors, and consequently having
38 DEMOCRACY VERSUS SOCIALISM part i
been produced by Society, is as much due to Society as the
* unearned increment of rent.' "
In the Fabian Essay Sy p. 127, the following opinion is
expressed : —
'* For now, for the first time since the dissolution of
the early tribal communisms, and over areas a hundred
times wider than theirs, the individual worker earns his
living, fulfils his most elementary desires, not by direct
personal production, but by an intricate co-operation in
which the eflfect and value of his personal eflforts are
almost indistinguishable. The apology for individualistic
appropriation is exploded by the logic of the facts of com-
munist production ; no man can pretend to claim the
fruits of his own labour, for his whole ability and oppor-
tunity for working are plainly a vast inheritance and
contribution of which he is but a transient and accidental
beneficiary and steward, and his power of turning them to
his own account depends entirely upon the desires and
needs of other people for his services. The factory
system, the machine industry, the world commerce, have
abolished individualistic production."
In Equality y Edward Bellamy's latest work, the follow-
ing argument occurs : —
" All human beings are equal in rights and dignity, and
only such a system of wealth distribution can therefore be
defensible as respects and secures those equalities. The
main factor in the production of wealth among civilised
men is the social organism, the machinery of associated
labour and exchange by which hundreds of millions of
individuals provide the demand for one another's product
and mutually complement one another's labours, thereby
making the productive and distributive systems of a nation
and or the world one great machine. . . .
** The element in the total industrial product, which is
due to the social organism, is represented by the diflTerence
between the value of what one man produces as a worker
in connection with the social organisation and what he
could produce in a condition of isolation. ... It is
estimated that the average daily product of a worker in
America is to-day some fifty dollars. The product of the
CHAP. IV THE ETHICAL CONCEPTIONS 39
same man working in isolation would probably be highly
estimated on the same basis by calculation if put at a
quarter of a dollar. To whom belongs the social organism,
this vast machinery of human association, which enhances
some two hundredfold the product of every one's labour ?
. . . Society collectively can be the only heir to the social
inheritance of intellect and discovery, and it is Society
collectively which furnishes the continuous daily concourse
by which alone that inheritance is made efFective." ^
On these grounds, Socialism boldly pronounces
judgment against the older standard of industrial ethics,
and declares, that not to the labourer who produces it, but
to Society collectively, belongs the wealth which any man's
labour produces, and that Society has absolute and exclusive
proprietary rights in all the produce of individual labour.
* Pp. 79, 80.
CHAPTER V
THE DISTRIBUTIVE PROPOSALS
The ethical conceptions which Socialism entertains, i.e.
that of the non-existence of natural rights, and that of the
inequity of the labourer possessing the fruits of his exertion,
are, as has already been stated, a necessary outcome of its
industrial and distributive proposals. The original object
of Socialism was no doubt the achievement of justice in
distribution — to supplant the undoubtedly unjust dis-
tribution prevailing now by a just and equitable apportion-
ment of the products of labour among those who, by their
individual exertions, have given it existence.^ So far,
however, socialists have been unable to arrive at an agree-
ment among themselves as to what would constitute a just
system of distribution. Moreover, nearly all the proposals
of distribution which have been advocated, and all the
proposals which are open to Socialism, offend against the
conception of justice embodied in the teaching that man
possesses inalienable natural rights, and that one of these
consists in the right of every individual to the possession
\ and enjoyment of the fruits of his own toil.
Professor Ely enumerates four standards of distributive
justice possible under Socialism : —
( I ) Absolute mechanical equality, Le. allotting to each
an equal quantity and quality of the various consimiption-
goods available for distribution.
^ '* We might define the final aim of Socialism to be an equitable system of dis-
tributing the fruits of labour." — Kirkup, An Lifuhy into Socialism^ p. 105.
" Socialists wish to secure justice in distribution, but they have not yet been able
to agree upon a standard of distributive justice, although they now generally seem dis-
posed to regard equality in distribution as desirable." — Ely, Socialim.
CHAP. V THE DISTRIBUTIVE PROPOSALS 41
(2) Hierarchical distribution, i.e. allotting to each a
general command over consumption-goods, equal in value
to the services rendered by him, lessened by a proportional
deduction to supply the values required for the renewal,
improvement, and extension of the social capital.
(3) Distribution according to needs, i.e. allotting to
each sufficient to satisfy his reasonable needs, regardless of
the value of the services rendered.
(4) Equality of income in value, i.e. allotting to each
an equal general command over consumption-goods, re-
gardless of the value of the services rendered, but leaving
the selection of the goods within the allotted value to the
varying individual desires.
The first of these four possible methods of distribution
may be disregarded here, as it is not now advocated by
any school of socialists, and is obviously impossible in any
large community.
The second standard — that of distribution according
to service rendered — is the one which naturally would
present itself as most nearly in accordance with the gener-
ally accepted conception of justice. It has been advocated
accordingly by many socialists, and is still presented as
their ideal by many when addressing popular audiences.^
Another section, leaning more to Communism, and accord-
ingly looking to beneficence more than to justice as a
social regulator, has advocated, and in some measure still
advocates, the third standard, i.e. distribution according
to needs. The Gotha platform of the Social Democratic
Party of Germany (1875)^ ^^7^ ^^ down that "to Society
— that is, to all its members — belongs the entire product
of labour by an equal right, to each one according to his
reasonable wants, all being bound to work."
^ ** Men come greativ to desire that these capricious gifts of nature might be inter-
cepted by some agency having the power and the goodwill to distribute them justly
according to the labour done by each in the collective search for them. This desire is
Socialism." — Fabian Essays, p. 4.
^*In the Commonwealth the men will be rewarded according to results, whether
they are mechanics or chiefs of industry, or transporters or salesmen. . . . But in regard
to the work of the chiefs of industry and professionals, they, undoubtedly, will institute a
new graduation of labour. There will be no more ^10,000 or ^CS^^^^* ^^ ^^''^ £iooq
salaries paid. . . . When * business ' is done away with, then their services will be com-
pared with manual work, as they ought to be, and paid for accordingly." — Gronlund,
Co-oterathve Commonwealth, pp. 143, 144, and 145.
^ Ante, P« '5*
42 DEMOCRACY VERSUS SOCIALISM part i
It is this passage which has caused Dr. Schaeffle to
alter his opinion with regard to the distributive proposals
of Socialism,^ and to state :
"Communism had already, in 1875, become the pro-
gramme of the German Social Democrats, and since then
has become more and more their widespread conviction ;" ^
and he defines Communism as (a) universal obligation to
equal labour ; (i) distribution by the community according
to socially recognised " reasonable needs " of each.
The silence of the Erfurt Programme on this subject
seems, however, to indicate that Dr. Schaeffle may be in
error in the latter part of his statement. English socialists,
moreover, have but rarely advocated this method, and they
as well as others seem to have arrived at the conclusion
that the only possible standard under Socialism is the
fourth, i.e. equal distribution in value, regardless of the
value of service.*
An examination of these rival systems inevitably leads
to the conclusion that English socialists are right, that the
method which they advocate is the only one not obviously
impossible under Socialism.
Apart from the manifest impossibility of determining
the " reasonable needs " of any one, in the absence of any
universal standard for the measurement of needs, distri-
bution according to socially recognised needs, if honestly
administered, would generally allot smaller incomes to the
young and able workers than to feeble and old members
of the society. For though the former contribute more to
the social income, their needs are few and simple ; whereas
the latter, who contribute less, possess, by reason of their
infirmity, greater and more varied needs. Moreover, the
needs of every person would have to be estimated either
by himself or by some distributer or distributing body.
If the estimate of the claimants were accepted, the utmost
^ Ante^ P« 17" ' 3"^ Impossibility of Social Democracy y p. 54.
* *'The fourth idea of distributive justice, and that which seems now to prevail
generally among socialists, is equality of income — not a mechanical equality, but equality
in value." — Ely, Socialism^ p. 16.
** The impossibility of estimating the separate value of each man's labour with any
really valid result, the friction which would arise, the jealousies which would be pro-
voiced, the inevitable discontent, favouritism, and jobbery that would prevail — all these
things will drive the Communal Council into the right path, equal remuneration of all
workers." — Fabian Essays, pp. 163, 164.
cHAP.v THE DISTRIBUTIVE PROPOSALS 43
resources of the State would probably be insufficient to
satisfy all the needs of all of them. If the determination
were left with some distributers, their decisions, even if
arrived at with the utmost care and impartiality, would,
nevertheless, provoke general discontent. Such impar-
tiality cannot, however, be expected. Inevitably the needs
of influential and favoured persons would be over-estimated
and those of powerless persons under-estimated ; jobbery
and corruption would undermine the system, and return
to a method less exposed to corrupt partiality and more
in accord with the interests of the great body of workers
would become inevitable.
Distribution according to the value of services rendered
is even more impracticable under Socialism. As already
pointed out, socialists justly observe — though they base
upon it conclusions not warranted by the facts — that the
co-operative processes of modern industry obscure the
individual origin of the final product, and make it im-
possible to determine which part of the whole, or of its
value, is due to the labour of any one of the co-operators.
No one can determine the respective contributions of
managers, clerks, book-keepers, spinners, weavers, and
carters, to the value of a bale of cotton cloth which their
joint labour has produced. Still less possible is it for the
socialised State to find a common denominator for the
value of services rendered in diflferent occupations. How
many hours' work of a weaver equal an attendance by a
great physician ? How much flannel will equal the value
of a great picture ? How many hours of a navvy's work
will equal one hour's work by a specially skilled mechanic ?
Competition settles these questions ; in the absence of
the self-regulating action of competition, which Socialism
posits, it is impossible to ascertain the value of any man's
services, or the value of any labour product, and, there-
fore, equally impossible to reward any one in accordance
with his services. The attempt to adopt this standard of
distributive justice would, therefore, result in an absolutely
arbitrary distribution of the social product, and, as the
Fabian essayist rightly admits, in friction, jealousy,
favouritism, jobbery, and corruption.
44 DEMOCRACY VERSUS SOCIALISM part i
There remains, as the last of the theoretically possible
systems of distribution under Socialism, that of equal
reward in value, regardless of the differing value of
services rendered. This reward would probably be
ascertained by taking the value of last year's total pro-
duction, deducting from the same the amount required for
the replacement and extension of national capital, and
dividing the remainder by the total number of claimants,
and placing the resultant amount to the credit of each, to
be drawn against — by the selection of consumption-goods
— at such times and places and in such variety as individual
preference would dictate.
This method, offering fewer difficulties than dis-
tribution according to service, is, however, not free from
objection. The latter method, as has been shown, is
impossible, because it leaves to the distributing agency
the arbitrary determination of the value of each person's
services and of the value of every commodity. Equality of
distribution in value, while eliminating the former difficulty,
leaves the latter in full force. Which is the standard of
measurement by which, in the absence of competition, the
value of all the various labour-products can be deter-
mined? The reply of socialists is, that labour- time
furnishes such a standard. One hour of any person's
labour will be regarded as conferring the same value on
the resulting product as one hour of any other person's
labour. Even if it be admitted that, under Socialism,
purchasers will value the result of a year's work by a
talented painter no higher than that of a year's work by
an ordinary sempstress, or that people will be no more
anxious to live in well-constructed houses than in those
badly constructed, great inequality of reward would arise
in respect of ordinary consumption-goods.
Take boots as an example. Even under Socialism
boots will largely vary in quality, though made within the
same labour-time. Not only are there wide differences in
quality between various kinds of leather, but the skin
from one part of an animal's body yields inferior leather
to that from another part. These differences are supple-
mented by variations in the more or less skilful treatment
CHAP. V THE DISTRIBUTIVE PROPOSALS 45
of skins and by difFerences of skill in manufacturing boots.
Yet, if labour-time determines value, no notice can be
taken of the resulting variations in quality, and boots
differing widely in durability, sightliness, and comfort,
must be valued alike and must be sold at the same price.
In other articles, such as furniture, ornaments, feminine
apparel, and others, where artistic merit and fashion
largely determine value, labour -time as the measure of
value must lead to still greater inequality of benefit.
Seeing that labour-time is not a possible standard ot
value ; seeing that no other has ever been suggested as a
substitute for competition, it follows that values must be
arbitrarily determined by the action of State officials, with
all the consequences of inequality of treatment, jobbery,
and corruption. As, however, all possible methods of
distribution under Socialism are open to the same objec-
tion ; as equal distribution in value confines such arbitrary
interference within narrower limits than any other, it must
be regarded as the least injurious method.
Equality of reward, however, as an inevitable con-
sequence, entails compulsory labour for all who are not
physically or mentally incapable. For it would be unjust,
demoralising, and, in the end, impracticable, to award to
idlers, capable of work, the same reward as to industrious
workers. Some system of compelling idlers and malingerers
to work, is, therefore, a necessary consequence of the
system of equal distribution. The following statement,
therefore, seems fully justified by the ethical conceptions
of Socialism, by actual proposals made by large sections
of socialists, and by general considerations : —
No system of distribution is possible under Socialism,
which does not necessitate the arbitrary, and, therefore,
corruptive interference of State officials. The one which
confines such arbitrary interference within the narrowest
limits is the allotment to each of an equal share, measured
by value, in that part of the total social income which is
available for distribution, accompanied by some system of
compulsion to honestly assist in the production of the
social income or render other service to the community.
This, the only method of distribution open to Social-
46 DEMOCRACY VERSUS SOCIAUSM part i
ism, involves, however, further consequences. Equality
of distribution cannot stop at any arbitrary line, but must
include all workers, whatever the nature of their work.
Lawyers, doctors, actors, musicians, painters, journalists,
litterateurs y and scientists can no more be placed apart and
allowed to earn any income they can than can architects,
surveyors, engineers, and exceptionally skilful mechanics.
The difficulties which beset the distribution of wealth in
the socialistic State, therefore, enforce the subjection of all
these classes of workers to the directive and controlling
superintendence of the State. As they are paid by the
State, so they must work under the control of its officials,
and these officials must determine the number of those
who shall exercise their talents in these professions, and
their respective locations ; while those who by them may
be deemed superfluous must be directed into other
avenues of employment. Such control, therefore, implies
the selection, by State officials, of the men who shall act as
lawyers, doctors, actors, musicians, painters, and sculptors,
journalists, litterateurSy and scientists. Any men not so
selected would have to abstain from such pursuits, unless
they carry them on after ordinary working hours. Even
if they do so, they cannot sell their pictures and statues,
but must give them away, and if they publish the results
of their labours, they must do so at their own expense,
unless they can induce the proper officials to do it at the
expense of the State. In neither case would they receive
any payment for their books.
Domestic servants could no more be allowed to
bargain for their reward than other classes of labour.
Equality of distribution would, however, cause domestic
service to become so rare an occurrence that it would take
a new form, probably one which would resemble the
existing organisation of professional nursing. The pro-
fessional servants would, however, be paid by the State,
who might deduct fees for their service from the credit of
those who occasionally employ them.
CHAPTER VI
MODIFICATIONS OF FAMILY RELATIONS
Many socialist writers advocate changes in the existing
marital relation, equally extravagant and repulsive. Dis-
regarding all such advocacy, as possibly the mere outcome
of individual idiosyncrasy, we shall inquire here what are
the changes in the constitution of the family which the
adoption of Socialism must produce.
Equality of reward, rendering women economically
independent, must powerfully afreet the relation of the
sexes to each other. Women will no longer be driven
into loveless marriages by fear of destitution or desire for
wealth ; nor will such considerations prevent them from
seeking the dissolution of unions which have grown dis-
tasteful.
The compulsion, accompanying the right to equal
reward, to render industrial labour equally with men, must
lead to further modifications. Women whose energy is
expended in industrial work cannot preserve the comfort
or even decency of an individual household. Even if
they were able to undertake the additional work required
it would be done perfunctorily, their interests lying else-
where. That this distaste for and inability to perform the
duties of the household is a necessary outcome of the
industrial occupations of women is shown by present-day
experience. An experienced observer, himself a socialist,
remarks : —
"The growth of factory work among women has
brought with it inevitably a weakening of home interests and
a neglect of home duties. . . . Home work is consciously
48 DEMOCRACY VERSUS SOCIAUSM part i
slighted as secondary in importance and inferior because it
brings no wages, and if not neglected is performed in a
perfunctory manner, which robs it of its grace and value.
This narrowing of the home as a place of hurried meals
and sleep is, on the whole, the worst iryury modern industry
has inflicted on our lives, and it is diflicult to see how it can
be compensated by any increase of material products.
Factory life for women, save in extremely rare cases, saps
the physical and moral health of the family. The
exigencies of factory life are inconsistent with the position
of a good mother, a good wife, or the maker of a home."^
This lessening of home interests and neglect of home
duties must inevitably lead to the disappearance of separate
family homes under Socialism. Married couples, as well
as adult single persons, would occupy one or two rooms in
what may best be described as boarding-houses, the service
in which would be performed exclusively by professional
attendants.
The industrial services demanded of mothers must
prevent due care being given to children, especially during
their earlier years, nor could such care be given under
the conditions imposed by residence in boarding-houses.
Children would therefore be handed over to the care of
the State at as early a period after birth as is practicable.
These, then, are immediate and obviously inevitable
results of Socialism : —
Economic independence of women, abandonment of
separate family homes, early separation of children and
\ parents, and transference of the former to the care of the
\ State.
The life of the family as it now exists, therefore, would
disappear, and the new life must profoundly aflfect the
relation of the sexes as well as the propagation of the race.
The probable nature of these consequential changes will
form the subject of subsequent inquiry.
^ Hobson, Evolution of Modern Capitalisnty p. 320.
\
CHAPTER VII
THE POLITICAL CONCEPTION
Socialism contemplates a state of society in which the
incomes of all citizens are equal, and in which all citizens
earn their incomes in the service of the State. Equality is \
one of its principal aims ; merit the only claim for pro- \
motion to influential though not better paid positions. It i
follows that the socialistic State must aim at political
equality as much as at economic equality, and that it cannot
recognise any political privileges outside its own bureau-
cratic (superintending and organising) circle. Socialism,
therefore, is democratic in the sense that it demands the
abolition of political privileges and the extension of equality
in the franchise to all adult persons of both sexes.
Practical considerations would have forced this attitude
upon Socialism, even if it were not a necessary outcome of
its distributive proposals.
The fundamental proposals of Socialism involve the
expropriation of the possessing classes, who are also the
incumbents of political privileges. Among these classes
it cannot, therefore, expect to make more than an
occasional convert. The nature of their proposals, there-
fore, compels socialists to rely mainly on die masses of the
people who possess little or no property, and some of
whom are as yet excluded from any or from an equal
participation in the franchise.
The equalising tendency of Socialism also makes its
existence incompatible with that of a hereditary aristocracy
and of a monarchy. The abolition of private property in
land puts an end to hereditary aristocracy, and the equal
50 DEMOCRACY VERSUS SOCIALISM part i
distribution of the social income is irreconcilable with
monarchical institutions. Hence Socialists are Republicans
as well as Democrats.
Out of the industrial proposals of Socialism there
arises also a tendency towards the decentralisation of the
functions of government. The conduct of localised
industries by local bodies presupposes the existence of such
local bodies, and would considerably increase their functions
and power. Moreover, while proposing to add enormously
to the power and functions of the central government,
socialists seem nevertheless to recognise to some slight
extent that this extension of power and functions may
foster despotic tendencies. They are, therefore, anxious
to limit the power of the central government as far as is
compatible with the due exercise of its industrial functions,
and pari passu to extend the power of local governments.
The narrow limits within which the industrial functions
of local governments are confined by the nature of industries
has already been indicated. It is less easy to indicate the
limit to their regulative functions outside of industrial
matters. That some extension in this direction is possible
may be granted, but in countries of advanced democratic
type like the United Kingdom, the United States, and
several British colonies, this extension cannot be far-
reaching. Nay, it may even be that, in one respect,
Socialism may prove a bar to the development of local
government.
The local administration of schools and of education is
everywhere one of the claims of democratic parties, and
there can be little doubt that considerable progress in this
direction will be made in the near future. But such local
administration must, and is intended to, result in diversity.
It may, therefore, lead to considerable difference in the
educational advantages offered in different localities, an
inequality of opportunity incompatible with the funda-
mental principles of Socialism. While it must be admitted
that the desire for decentralisation exists among socialists,
and that it is not opposed to the principles of Socialism, it
nevertheless appears that the decentralisation possible in
the socialistic State will by no means be of sufficient im-
CHAP. VII THE POLITICAL CONCEPTION 51
portance to counteract the additional power which the
assumption of industrial and distributive control will confer
upon the central government.
On the other hand, Socialism necessarily tends to a
further centralisation, that of internationalism. The
ramifications of modern industry extend far beyond the
limits of any State. No nation is or ever can again be
industrially self-contained. The problem of achieving a
balance between production and consumption cannot, there-
fore, be successfully solved by an authority which is con-
fined to the limits of a single State. Hence, socialists aim,
more or less consciously, at some international industrial
federation, the executive of which shall regulate the con-
duct of all industries of international character.
CHAPTER VIII
IS SOCIALISM SCIENTIFIC
One of the claims most frequently and passionately urged
by modern socialists is, that their system has emerged from
the empirical stage and has become scientific. Neverthe-
less, this claim appears to be unfounded. Knowledge
becomes science through the systematic arrangement of
the natural laws by which a group or groups of related
facts or phenomena are governed, and in their interpretation
through causal connection, so that from that which is
observable conclusions can be formed with regard to that
: which is not observable. The essential condition through
which a mere collection of facts becomes a science is,
therefore, the discovery and tabulation of the invariable,
natural laws which govern their appearance. Any system
which applies such natural laws to man's needs, is a system
based on science, i.e. scientific. Thus navigation is
scientific, inasmuch as it is based on the sciences of
mathematics and astronomy ; -a scientific system of medi-
cine is based on the natural laws tabulated by the sciences
of biology and chemistry ; a scientific system of mining is
based on geology, etc. Likewise any system of politics
■ will be scientific, if it is based on well-ascertained natural
laws governing the conduct of man in society. But if any
' political system is not based on such natural laws, still
. more if it is based on the express denial of the existence
: of such laws, it cannot be scientific ; it is a mere empirical
. conception.
This is the position of Socialism. The most prominent
of the conceptions on which it is based is, that there are
CHAP. VIII IS SOCIALISM SCIENTIFIC 53
no natural laws which govern the distribution of wealth ;
that distribution may be governed by municipal enact-
ments alone, and that, therefore, its arbitrary regulation is
a necessary function of the State, and the only means by
which justice in distribution can be achieved. Whether
this conception is true or not does not concern us here.
If true, then Socialism is not scientific, because there is
no science on which it can be based ; if untrue, then
Socialism is imscientific, because it disregards the science
on which the economic part of politics must be based.
This denial of natural law, therefore, whether in itself it
is true or not, destroys the claim of Socialism to be
considered scientific, and proves that it is based on un-
verified or unverifiable interpretations of facts, the causal
connection of which is either unknown or disregarded.
The ethical conceptions on which Socialism is based
are equally empirical and equally deny the possibility of
any moral science. For the conception of a right includes
that of a duty to respect that right. The denial of natural
rights, therefore, involves the denial of natural duties. If
all rights are granted by the State, all duties are imposed
by the State. Moral conduct, therefore, is conduct
according to law ; there is no standard by which the
morality of any law may be determined, for the existence
of the law constitutes its morality. Morality, therefore,
has no existence ; it is merely a secondary term for legality.
As in the case of economics, therefore. Socialism is
unscientific, whether this denial of ethics, and, consequently,
of ethical science, is true or untrue ; if true, because there
is no ethical science on which its proposals can be based ;
if untrue, because its proposals disregard the laws which
that science has established.
CHAPTER IX
THE DEFINITION OF SOCIALISM
The foregoing examination enables us to give a compre-
hensive definition of Socialism, as follows : —
Socialism is an empiric system of organisation of social
life, based on certain ethical and economic conceptions.
Its ethical conceptions consist, generally, of the denial of
individual natural rights and the assertion of the omni-
potence of the State ; specially, of the denial of the right
of the individual to the possession of the products of his
labour, and the assertion of the right of the State to the
possession of the products of the labour of all individuals.
Its economic conceptions are, that competition and
private property in land and capital, and the consequent
exaction of rent, interest and profit, i.e. surplus value, by
private persons, are social evils, responsible for the material
and mental destitution of vast masses of the people.
On these conceptions are based its industrial, distribu-
tive, and political proposals. They are : The gradual
abolition of private property in and private control of the
instruments and materials of production, land, transporta-
tion, trade, loan-capital, and public debts ; such abolition
to take place without compensation, or through partial
compensation only, of present proprietors as a whole. For
these private rights it would substitute the collective
ownership and management by the community, acting
through local and central governmental bodies, of the
instruments and materials of production, land, transporta-
tion, trade, and loans, continuing private property in and
private control of all consumption - goods awarded to
\
V
CH. IX THE DEFINITION OF SOCIALISM 55
individuals as their share of the products of the national
indxistry.
The only arrangement possible under Socialism, for
awarding to individuals a share in the products of the
national industries, is, to allot to each an equal share,
measured by value, in that part of the national income
which remains, after due deduction has been made for the
replacement and extension of national capital. The only
possible standard of value, labour-time, however, would
lead to inequality in the share of the national income
obtained by each, and must, therefore, be supplemented or
superseded by the arbitrary determination or the value of
all products by State officials.
The political proposals of Socialism are : equal political
rights for all adult individuals of both sexes ; extension
or the powers and functions of local governmental bodies,
and international control of international production and
trade.
These proposals entail certain consequential changes in
social organisation.
The management by the State of all production and
trade involves a numerous graduated body of officials for
the control of the individuals employed, and the deter-
mination of the kinds, qualities, and quantities of goods to
be produced. These officials must determine the occupa-
tion and place of employment of all individuals of both
sexes.
The distributive proposal involves some system of
compulsion to honestly assist in the production of the
national income, or to render other service to the com-
munity ; as also, the control of all literary, journalistic,
artistic, and scientific production, and the selection of
those who shall engage in such production. It also in-
volves the following changes in the constitution of the
family : — Economic independence of women ; abandon-
ment of separate family homes ; early separation of
children and parents, and transference of the former to
the care of the State.
PART II
ECONOMICS
CHAPTER I
MARX*S THEORY OF VALUE
The basis of every politico-economic theory is to be found
in its conception of value. For the world-wide industrial
co-operation, which unites the nations of the earth into
one economic society, depends for its existence upon
exchange ; not only upon exchange of the final product,
but also upon exchange of the numerous intermediate
products which make their appearance during the produc-
tion of every commodity. It also depends upon the still
more numerous exchanges of labour and services for
products. Exchange, however, is itself dependent upon
the formation of a concept of value in the minds of the
parties to the exchange. The view taken of the concept
** value " must, therefore, fundamentally affect the aspect
of our industrial organisation.
Socialism, as has been shown, makes no exception to
this rule. Its original German exponent, Rodbertus-
Jagetzow, indicated a theory of value consistent with his
general conceptions, which, subsequently, was developed by
Karl Marx,^ who formulates it as follows : —
" That which determines the magnitude of the value
of any article is the amoimt of labour (labour-time) socially
necessary for its production." *
Marx also explains that the labour to which he refers
must be imderstood in the following sense : —
I . " The labour-time socially necessary is that required
^ The theories of Rodbertus are traced to French, and those of Marx to English
toorccs, by Anton Menger, The Right to the Full Produce of Labour,
* Q^tsl^ P* 6 9 *tt for full quotation. Part I. chap. i.
6o DEMOCRACY VERSUS SOCIALISM part ii
to produce an article under the normal conditions of pro-
duction, and with the average degree of skill and intensity
prevalent at the time." ^
2. *' Skilled labour counts only as simple labour in-
tensified, or rather, as multiplied simple labour, a given
quantity of skilled being considered equal to a greater
quantity of simple labour. Experience shows that this
reduction is constantly being made. A commodity may
be the product of the most skilled labour, but its
value, by equating it to the product of simple unskilled
labour, represents a definite quantity of the latter labour
alone." ^
3. " Suppose that every piece of linen in the market
contains no more labour-time than is socially necessary.
In spite of this, all these pieces, taken as a whole, may
have had superfluous labour-time spent upon them. If
the market cannot stomach the whole quantity at the
normal price of 2s. a yard, this proves that too great a
portion of the total labour of the community has been
expended in the form of weaving. The effect is the same
as if each individual weaver had expended more labour-
time upon this particular product than is socially necessary.
Here we may say with the German proverb : caught to-
gether, hung together. All the linen in the market counts
but as one article of conunerce, of which each piece is only
an aliquot part." ^
These explanations are so contradictory of each other,
and of other statements by the same author, presently to
be referred to, that they go a considerable way towards
discounting his theory.
In Explanation i the " socially necessary labour-time "
which determines value is stated to be dependent upon
" the average degree of skill and intensity prevalent at the
time." In No. 3 it is stated that if the market cannot
take up all the linen produced, at the " normal " price, i.e.
the price which covers the socially necessary labour-time,
" too great a proportion of the total labour of the com-
munity has been expended in the form of weaving. The
effect is the same as if each individual weaver had
^ Capital^ p. 6. ^ Ibid. pp. ii, 12. * Bid, p. 80.
CHAP. I MARX'S THEORY OF VALUE 6i
expended more labour-time upon this particular product
than is socially necessary."
It is, however, manifest that if it is true that the
" average degree of intensity prevalent at the time " is the
** socially necessary labour-time," then the average degree
of intensity with which linen-weavers work determines the
"socially necessary labour-time" for the production of
a given quantity of linen, and the value of the linen is
determined by this labour -time. Therefore, it is im-
possible, being a contradiction in terms, that "each
individual weaver can expend more labour-time upon this
particular product than is socially necessary." Some
weavers may expend more labour -time on a given
quantity of linen than "the average prevalent at the
time," but all cannot possibly do so.
If all the weavers increase the labour-time expended
upon linen, the average of labour-time " prevalent at the
time " in the linen industry will rise, and, ex hypothesis the
value of linen must rise. Therefore, it cannot be true,
that this course would produce the same effect as " if the
market cannot stomach the whole quantity at the normal
price of 2s. a yard," for such a contingency would reduce
the value of linen, a fact which the wording of the quoted
sentence proves to have been apprehended by Marx.
If to this reasoning it is objected, that the average
skill and intensity of which Marx speaks is that prevalent,
not in a single industry, but throughout all industry, the
disproof of the objection lies in the following considera-
tions : —
If the average labour-time requisite throughout all
industry determines value, the determinator of value, the
average labour-time, is of the same magnitude in all
industries, and, as a necessary consequence, the value of
the product of all industries must be of the same magnitude,
i.e. the value of an equal quantity of all products must be
the same. One yard of cotton-cloth of a given weight must
then exchange for one yard of any silk-cloth of the same
weight ; one pound of flour must exchange for one pound of
meat, for one pound of iron, and for one pound weight of
alvcr and of gold. This we know not to be the case, and
62 DEMOCRACY VERSUS SOCIALISM part ii
if the objection here considered gave true expression to
the meaning of Marx's theory, the latter might be dis-
missed at once as too absurd for further consideration.
Marx himself, however, makes it quite clear that the
theory embodied in this objection is not held by him ;
though it must be admitted that his own is only a degree
less wild. Marx fully recognises that the average labour-
time requisite in any industry is determined by other
factors besides the skill and intensity of work put forth by
the labourers who engage in it, viz. by the appliances and
natural opportunities at the disposal of the industry, and,
therefore, he regards the average labour-time requisite
for the production of any homogeneous product as the
measure of the value of that product.
The following quotations bear out this statement : —
" The introduction of power-looms into England prob-
ably reduced by one-half the labour required to weave a
given quantity of yarn into cloth. The hand -loom
weavers, as a matter of fact, continued to require the
same time as before ; but for all that the product of one
hour of their labour represented after the change only
half an hour's social labour, and consequently fell to one-
half its former value." ^
And further : —
" Diamonds are of very rare occurrence on the earth's
surface, and hence their discovery costs on an average a
great deal of labour-time. . . . With richer mines, the
same quantity of labour would embody itself in more
diamonds, and their value would fall." ^
These statements clearly prove that in Marx's opinion
the value of any product is determined by the average
labour-time socially necessary in the production of that
product, and not by the average labour-time requisite in
all production. Therefore, the value of linen is determined
by the average labour-time requisite in its production. If
that labour-time increases in quantity, by the habitual
slowness or want of skill of all linen weavers, the result,
therefore, must be a rise in the price of linen, and not a
fall as he asserts in Statement 3.
1 Capital, p. 6. « Ibid, p. 7.
CHAP. I MARX'S THEORY OF VALUE 63
It is difficult to escape the conclusion that the whole of
Statement 3 was framed with a view of avoiding the obvious
objection to the labour-time theory of value, 9iat the price
of nearly all articles in large demand varies independently
of any variation in the labour-time required for their
production.
The contradiction, so far proved, is not the most
serious one. The statement contained in Explanation 2,
that skilled labour counts only as " simple " " unskilled "
labour multiplied, is a still more glaring petitio principii.
The basis of Marx's theory is that the value of labour-
power is determined by the cost of its production, i.e. by
the labour-time requisite to produce the means of sub-
sistence of the labourer and his family. " The value of
labour-power is the value of the means of subsistence
necessary for the maintenance of the labourer." ^
If this be true, the value of the labour-power of a
skilled labourer is determined in the same manner. It
may be that, in general, skilled labour requires more
education and a better standard of living than ordinary
labour. But it is certainly not true that on an average
the " necessary " cost of maintenance of labour increases
pari passu with its skill. Therefore the labour -time
theory of value is upon the horns of this dilemma.
Either the value of skilled labour is determined like that
of all labour *' by the value of the means of subsistence
necessary for the maintenance of the labourer," in which
case " a given quantity of skilled labour " is not " con-
sidered equal to a greater quantity of simple labour," for
this idea involves that of proportion ; or this latter state-
ment is true, in which case it is untrue that the value of
all labour-power is " the value of the means of subsistence
necessary for the maintenance of the labourer."
If, of the two horns, the latter is chosen, the whole of
the Marxian theory of surplus value resolves itself into an
idle dream, for it is based upon the foundation that all
labour -power is purchased at sustenance cost by the
capitalist and sold by him at product value. If the first
horn is chosen, Marx's value theory falls to the ground,
^ Capital, p. 149. For fuller quotation see Part I. chap. i.
64 DEMOCRACY VERSUS SOCIALISM part ii
for it is then admitted that other elements than average
labour -time, socially necessary, enter into the value of
products.
Moreover, this conversion of skilled into unskilled
labour-time is a still more obvious juggle than the one
previously pointed out, and is similarly devised in order to
escape from another inevitable objection to the labour-
time theory. Goods produced by skilled labour generally
possess a greater value, and frequently possess an infinitely
greater value than those produced by ordinary labour in
the same time. A sketch produced by an artist in one
hour may, to take an extreme case, possess a hundred
times the value of the work done by a house -painter
during an equal time. The recognition of this fact is
sufficient to completely disprove the theory that "the
value of any article is determined by the labour -time
socially necessary for its production." Therefore, this
transmutation of skilled into unskilled labour had to be
devised in spite of its incongruity with the general
character of the labour-time theory in order to mask the
facts which disprove this theory.
The trick is the same as that involved in the following
dialogue : —
A. All coats have the same price.
B. That cannot be so ; I saw some coats to-day, and
found great differences of price. One actually had a
price four times as high as that of the cheapest among
them.
A. That is, because the more highly priced coats count
as less expensive coats multiplied. In the case you
mention the most expensive coat counts as four cheaper
coats. Therefore your objection has no weight ; it
remains true that all coats have the same price.
These incongruities throw considerable doubt upon
the theory of value according to labour-time. If now,
instead of dissecting the statements of its author, the
theory is subjected to the test of deduction, if it is
compared with the facts which it is intended to explain,
the doubt is converted into certainty. For it is then
found to be contradicted by the vast majority of the
CHAP. I MARX'S THEORY OF VALUE 65
phenomena of value. Grouping these into classes, they
are —
Land, patents, copyrights, and other monopolies
which possess value, though no labour has been expended
in their production. It will be obvious that the element
which is altogether absent in one class of values cannot be
the universal determining factor of all Values.
Scarce goods of all kinds, which either cannot be
reproduced or the reproduction of which is limited, such
as old editions, coins, statues, pictures, rare wines, etc.,
possess a value which cannot be brought into harmony
with labour-time.
The products of all skilled labour possess a value
which, as already pointed out, cannot be reduced to the
labour-time involved in their production.
The products of the mining and agricultural industries,
such as coal, copper, pig-iron, lead, tin, gold, silver, wheat,
cotton, wool, and many others, differ widely in the labour-
time necessary for the production of the several quantities
of each of them. While some land used for wheat-growing
will only yield 8 or 9 bushels per acre in average seasons,
other land yields to the same or a little more labour-time
25 and 30 bushels. In the mining industry the differences
are even greater. Yet all the wheat, or iron, or any other
of these products has for the same quantity and quality,
and in the same market, the same value. If this value,
say of wheat, were determined by the average labour-time
socially necessary to produce wheat, all those who produce
wheat on less productive land, and therefore spend more
than the average labour-time in the production of a given
quantity, would be at a permanent disadvantage, and those
who produce wheat on or near the marginal land, i,e. the
least productive in use, would be heavy losers year after year.
It is manifestly unthinkable that the farmers who
produce this wheat would or could persevere in this
disastrous course year after year. In the Australian
colonies, at any rate, they are not large capitalists, and
would in two or three years find themselves in the bank-
ruptcy court.
The fact is, that unless the value of wheat over an
66 DEMOCRACY VERSUS SOCIALISM part ii
average of seasons is high enough to compensate for the
labour-time necessary to produce wheat at the margin of
cultivation, i.e. on the least productive land used, wheat
cultivation on such land is abandoned. The same fact
can be observed in all extractive industries, and is equally
true, though less easily proved, of all other industries.
The value of goods must therefore, on the whole, be equal
to or come near to the greatest amount, and not to the
average amount, of labour -time socially necessary to
produce the total quantity of such goods which the
market requires.
Not only all the products of the extractive industries,
but also most of the manufactures, into the composition of
which these largely enter, are subject to frequent changes
in value, without any alteration in the average labour-time
socially necessary for their production. Changes in the
value of agricultural products, dependent upon climatic
influences, may occasionally be consistent with increase or
reduction in labour-time, owing to more or less favourable
harvests. Apart from these, however, the market registers
daily, weekly, and monthly changes in the value of such
products, which cannot be connected with any such
cause. Variations in the value of mineral products and
their derivatives, which are of frequent occurrence, also
cannot be due to any such cause. It is doubtful whether,
in the course of these frequent variations, the value of
such goods ever approaches that which would be congruous
with the average labour-time socially necessary for their
production, arid it is obvious that, generally, there can be
no such congruity.
The same phenomenon may be observed with regard
to all goods liable to sudden increases or reductions of
demand, i.e. fashionable goods.
Protective duties as well as revenue duties generally
increase the price of the goods to which they apply with-
out the least increase in the labour-time necessary for their
production. This not only holds good with regard to
the goods on which the duty has been paid, but also with
regard to similar goods, locally produced, on which no
such duty has been paid.
CHAP. I MARX'S THEORY OF VALUE 67
The value of all goods which for their production
require lengthy processes generally exceeds the value of
those which require shorter processes, though the average
labour-time involved is the same or less. The differences
in the value of new and old wines, and the value of old and
useful trees, suggest themselves as convenient examples of
this fact.
These facts, embracing almost all the phenomena of
value, prove that, while some goods may occasionally
possess a value equal to the average labour-time socially
necessary for their production, such correspondence is an
accident instead of being the rule with regard to all values.
A theory which predicates, as a fact universally true of all
related phenomena, a relation which is generally absent
from all of them, and which only occasionally may exist
with regard to some, possesses no element of validity.
Whether the Marxian theory of value is examined with
r^ard to the congruity of its various parts ; or whether it
is examined with regard to its congruity with the phen-
omena of value which it is intended to relate and explain,
the result is the same. Both methods show it to be a
hypothesis ill-considered and untenable.
This truth is now admitted by a considerable body of
socialists.^ But not only is Marx's theory still generally
accepted as true by the vast majority of socialists ; not
only do those who reject the theory nevertheless counte-
nance its being taught to the great body of their followers,^
but all socialists retain their belief in deductions which
Marx made from this theory, and for which it seems to be
the necessary basis. Nay, it is even maintained that
^ ** English socialists are by no means blind worshippers of Karl Marx. Whilst
recognising his valuable services to economic history, and as a stirrer of men's minds, a
large number of English socialist economists reject his special contributions to pure
economics. His theory of value meets with little support in English economic circles,
where that of Jevons is becoming increasingly dominant.*^ — Socialism in England, by
Sidney Webb, pp. 84, 85.
' " The theory of value has a different history. Like the rainbow theory, it began
by being simple enough for the most unsophisticated audience, and ended by becoming
so subtle that its popularisation is out of the question, especially as the old theory is
helped by the sentiments of approbation it excites ; whereas the scientific theory is
mtblessly indifferent to the moral sense. The result is that the old theory is the only
one available for general use among socialists. It has accordingly been adopted by them
in the form (as far as that form is popularly intelligible) laid down in the first volume of
Karl Marx's Capital.^' — ** The Illusions of Socialism," by Bernard Shaw, in Fortcast cj
tk€ Comimg Century y p. 164.
68 DEMOCRACY VERSUS SOCIALISM part ii
Jevons's utterly divergent theory still more fully sustains
these deductions.^ For all these reasons, and in spite of
its repudiation by the Fabian socialists, a detailed refuta-
tion of Marx's theory of value was necessary ; and for the
same reasons, as well as in order to clear the way for
subsequent refutations of other economic theories of
Socialism, it is advisable now to enter upon an exposition
of the law of value accepted as true by those socialists
who repudiate the Marxian theory and by economists
generally. I refer to Jevons's quantitative theory of value
as developed and extended by the Austrian school ot
economists.
^ " Possibly if Jevons had foreseen that his theory would make Socialism economically
irrefutable . . . his scientific integrity might also have gone by the board." — Socialism in
England, by Sidney Webb, p. io6.
CriAPTER II
THE QUANTITATIVE THEORY OF VALUE
Jevons's theory of value takes human desire as its starting-
point. Commodities possess value because they can satisfy
some want or desire of man, i.e. because they possess
utility. The desire for any commodity may, however, be
so fuUy met by an increase of supply, that the desire
becomes extinguished ; while, on the other hand, a reduction
in the supply of some commodities, if large enough, may
cause the desire for them to become irresistible. "We
may state as a general law that the degree of utility varies
widi the quantity of commodity, and ultimately decreases
as that quantity increases." ^
The several portions of the same stock of a commodity,
therefore, possess different degrees of utility. As, how-
ever, any two equal quantities of the same commodity are
interchangeable, either will be taken with absolute in-
difference by any purchaser. Hence no one will give
more for any equal portion of a stock of a commodity
than for that portion which possesses the least utility.
Hence the value of the whole stock of any commodity is
determined by the utility of its final portion, i.e. by its
final utility.
Jevons's exposition of the quantitative theory of value,
though true as far as it goes, embraces but a limited series
of the phenomena of value. It has received the necessary
extension at the hand of the Austrian school of economists,
whose conclusions are now generally accepted. In the
following, necessarily much condensed, summary of their
^ Jevons, Tke TAeory of Political Economy^ 3rd edition, p. 53.
70 DEMOCRACY VERSUS SOCIAUSM part ii
teaching I lean largely upon Professor von Bohm-Bawerk's
profound exposition in The Positive Theory of Capital.
All human action is prompted by desire and resisted
by distaste for exertion. In order that a thing may
be produced, the desire for it must conquer the distaste
for the exertion which its production necessitates. The
acquisition of goods through exchange is dominated by
the same law. In an exchange of, say boots for hats, the
desire of one party for hats must conquer his reluctance
to part with boots, and vice versa^ i.e. the thing to be
acquired must be more ardently desired than the thing to
be given up on both sides or no exchange can take place.
But desire and utility are merely two aspects of the same
relation. Men desire things because they are of some use to
them, i.e. because they possess utility ; and things are useless,
i.e. possess no utility, unless they can satisfy some desire.
Things may, however, be valued from a subjective
standpoint — that is, for their power to satisfy the owners'
desire for themselves ; or from an objective standpoint,
when the desire is for other things which they bring
through exchange. In either case their value depends
upon, and is a consequence of the utility of the things.
Hence it is clear that utility is the cause of both subjective
or use-value, and of objective or exchange-value.
Utility and value are not, however, convertible terms,
for a thing may possess utility without possessing value.
In order that a useful thing may acquire value, the desire
for it must be strong enough to provoke action ; and in
order to do this the thing must be an indispensable con-
dition of the satisfaction of desire. Water as such is
capable of quenching thirst. But if I want a cup of water
from a flowing stream, any particular cupful has no more
utility than any of the other thousand cupfuls of water
which every minute are flowing by. I would lose no
satisfaction by the loss of any particular cup of water. It
is capable of satisfying my desire, but its possession is
not an indispensable condition of satisfaction. Therefore,
water, though useful, possesses no value in this place.
In a desert, however, where water is scarce, the loss of
any single cup of water may compel some of my desire for
cH.ii QUANTITATIVE THEORY OF VALUE 71
water to go unsatisfied. Where this is the case, every cup-
ful of water is an indispensable condition of satisfaction,
and, therefore, water does possess value here.
It follows : in order that utility shall evolve into value,
the available quantity of the useful thing must be so limited
that some desire for it may have to go unsatisfied unless
the available quantity is increased.
The value of goods, therefore, is a consequence of
their utility. Their relative utility was classed by the
classical school of economists according to the kind of
desire which they could satisfy. First in the order of
importance they placed necessaries, next superfluities, and
last luxuries. Hence they came to the conclusion, adopted
by Marx, that the use-value and exchange-value of things
had no necessary connection with each other. For accord-
ing to this classification the use-value of bread infinitely
exceeds that of diamonds ; yet the exchange -value of
diamonds is enormously in excess of that of bread. This,
however, is a purely academic manner of looking at the
conduct of men. They do not feel the promptings of
desire according to this scale. Many a family has stinted
itself in food in order to keep a carriage ; women con-
stantly deprive themselves of necessaries in order to save
money for a new dress or a coveted ornament ; and men
will deprive themselves of food or go about in old and
shabby clothes in order to get tobacco, beer, or tuition.
It, therefore, is not the kind of desire which determines |
the value of the object of that desire, but the degree of
desire for that object.
Any given kind of desire is felt in differing degrees of
urgency, and may, for a time, be extinguished by satis-
faction and even by the assurance of satisfaction. To
come back to the former illustration, the man who has
drunk enough water and sees more of it flowing by him,
has no longer any desire for water. Even in a desert, if
conscious that he has more than suflficient water with him,
his desire for any particular gallon of this water is small.
But should he lose so much of it, that the remainder is
barely suflSicient for the rest of his journey, he will feel a
more urgent desire for what is left and will value it more
72 DEMOCRACY VERSUS SOCIALISM partii
highly. The loss of every additional gallon will increase
the desire which he feels for, and the value which he sets
on, the rest.
Not the kind but the degree or urgency of desire,
therefore, measures the utility and the value of the desired
object ; and as goods of the same kind are interchange-
able, the least urgent degree of desire which can be satisfied
with the available quantity, i.e. the marginal desire, deter-
mines the value of the entire available quantity. Or, in
other words, the value of any commodity in the market is
determined by the valuation of the marginal buyer, i.e. the
buyer whose effective desire is least urgent.
Not only is every kind of desire felt in many differing
degrees of urgency, but many commodities are capable of
satisfying several kinds of desire of differing urgency.
As an illustration,^ take the case of a solitary settler,
who has just harvested five bags of wheat on which he
must live till the next harvest. He determines that the
best use he can make of them is to devote one bag to
making bread ; one to make puddings and cakes ; one
to feed poultry for his meals ; one to make into spirit ;
and having no direct use for the fifth bag, he decides that
it will be most usefully employed in feeding parrots and
song-birds which he will catch. What is now the value
of a bag of wheat to him ?
There can be no doubt as to his answer, for if he were
to lose one of the bags, he would obviously discontinue
the feeding of captured birds, while continuing to use the
remaining four bags for his more pressing wants as before.
The use of one bag for feeding birds, therefore, was the
marginal utility of his whole stock of wheat. What he
lost, when he lost one bag, was this former marginal
utility, and this utility determined the value of this one
bag of wheat.
The assumption, however, is that the five bags of wheat
are all of exactly the same weight and quality, therefore
interchangeable. It is, therefore, a matter of indifference
to the settler, which of the five bags is lost, i.e. they are
^ Free rendering of example in A Positive TAeory of Capital^ by Prof, von Bbhm-
Bawerk.
cH.ii QUANTITATIVE THEORY OF VALUE 73
all of the same value to him. Hence the value of one bag
bdng determined by the least urgent desire which the whole
quantity enables to be satisfied, and the value of all bags
being alike, it follows that this same desire — the marginal
utility — determines the value of all five bags of wheat.
If now another bag were lost, the settler would dis-
<:ontinue making spirits, i.e. the marginal utility of four
bags of wheat would have been determined by this, the
highest use to which the fourth bag of wheat could be
put, and this use would have determined the value of all
the bags. If another bag were lost, the settler would dis-
continue the feeding of poultry ; and if still another were
lost, that of making cakes and puddings. Being then
reduced to one bag, none of the less urgent wants can
be satisfied ; to lose this last bag would mean death.
Marginal utility and highiest utility have become one, and,
to the settler, the value of this remaining one bag is im-
measurably high.
Suppose now that a hawker penetrates the wilderness
and offers to exchange some of his wares for wheat. If
the settler have five bags, he will part with one at a com-
paratively low rate ; for in parting with it he loses only
the satisfaction of feeding birds. If his stock consists of
-only four bags, he will demand a higher rate for any one
of them, because he loses a higher satisfaction in parting
with it. If he had only one bag, he would not part with
it at any price.
The motives which determine the valuation of goods
by this solitary settler also determine their valuation in
the largest industrial community. Other things being
«qual, increase of supply reduces value and decrease of
supply increases value — that is, when the available quantity
of any commodity increases, lower levels of desire must be
appealed to than before ; these being less urgent will not
become active unless the sacrifice imposed through their
satisfaction is reduced, i.e. until the price falls. The value
thus imposed by the least urgent desire determines the
value of the whole stock. If supply decreases, less urgent
desires cannot be satisfied, and a more urgent desire, form-
ing the marginal of economic employment, produces a
74 DEMOCRACY VERSUS SOCIALISM partii
higher value for the whole stock. If, however, the avail-
able quantity of any commodity is so large, that all possible
desires for it can be satisfied without absorbing the whole
quantity, the marginal utility of the whole of it is zero, and
the value of it is nothing.
So far it has been shown that the value of goods arises
from their utility, and is determined by their marginal
utility. It now becomes necessary to consider a class of
goods which cannot directly satisfy any desire, but which
assists in the production of such desired goods, i.e. pro-
ductive goods, or, in the phraseology of Socialism, " means
of production." Whence do these derive their value?
The answer is that their value also is determined by the
marginal utility of the stock of consumption-goods which
forms their final product.
The end and purpose of all production is the satisfac-
tion of human desire through consumption. Therefore,
every material, instrument, and opportunity of production
from the land downwards is, economically speaking, under-
going the process of being converted into consumption-
goods. Take a concrete case, say, that of bread. Let us
call it a commodity of first rank. Its existence depends
upon that of commodities of second rank, viz. flour, oven,
and upon the labour of the baker. The existence of these
again depends upon a group of commodities of third rank,
viz. wheat, mill, materials 6f oven, and upon the labour of
producing them. They are again conditioned by a group
of fourth rank, viz. agricultural implements, building
material of mill, by land, and by labour. With the ex-
ception of bread, none of these things are desired for them-
selves, for none can directly satisfy any desire. Each of
them, however, does satisfy desire indirectly, through their
final product, bread. Each one of these groups of pro-
duction-goods is, economically speaking, bread in the
making ; is valued only in so far as it assists in the
ultimate satisfaction of the desire for bread. Their only
contact with desire is through bread, and their value,
therefore, is determined by the value of bread. As the
value of bread itself is determined by the quantitative
relation between the wants for bread and the supply of breads
CH. II QUANTITATIVE THEORY OF VALUE 75
i.e. by the marginal utility of bread, the same condition
determines the value of each group of the productive goods
which is called into existence by the wants for bread.
In the modern co-operative system of industry, it is,
of course, impossible for all intermediate producers to
know the value of the final product. But each group of
productive goods has an intermediate product, and finds
its value in that of its intermediate product. Thus,
reverting to our previous illustration, the value of bread
directly determines the value of the group of commodities
of second rank ; the value of flour, their intermediate
product, determines that of the group of commodities of
third rank ; and the value of wheat determines that of the
group of fourth rank, of which it is the intermediate pro-
duct ; and all this, because the value of wheat and flour
depends upon the marginal utility of bread as much as the
value of bread itself. " Though the conduction of value
from the anticipated final product back to intermediate
product, and from that back to the very first product of
all, may remdn hidden from each producer, the organisa-
tion of industry practically carries the information from
stage to stage." ^
It will thus be seen that this theory derives the cost
of production from the marginal value of the final pro-
duct, instead of deriving the value of the product from
the cost of production. However paradosdcal this con-
ception may seem when compared with surface appear-
ances, it is nevertheless borne out by common experience.
No cost of production can give value to a thing the desire
for which has ceased ; if goods are out of fashion, i.e. if
the desire for them has lessened, they fall in value regard-
less of their cost of production. Merchants and retailers
whose shelves are encumbered with " dead stock " know
this to their cost.
Common experience, however, suggests, that if the
cost of producing an article of general consumption falls,
such as iron, steel, wool, or cotton, there will sooner or
later be a corresponding fall in its value. The fact is true,
but the compelling force does not arise from the lessened
^ Smart, Introduction.
76 DEMOCRACY VERSUS SOCIALISM part ii
cost of production. The producers are not anxious to
lower the price as long as they can dispose of all their
products. If they could combine to prevent an increase
in supply, they could prevent, as in protectionist countries
they have frequently reduced, the fall in value. When,
however, such a fall in the cost of production takes place,
the supply generally does increase, either through the
desire of previous producers to reap the increased profit
from a greater number of sales ; or through the desire of
capitalists to share in the exceptionally high profit, by
joining in the production of the article in question ; or
from both these causes. As a consequence, the wants
which previously were fully supplied cannot absorb the
additional supply ; lower levels of wants must be appealed
to, and can only be induced to take up the new supply if
it can be obtained with a smaller sacrifice, i.e. at less cost.
But as all parts of the whole stock are interchangeable, no
one will give more for any of them than the marginal
buyers offer for the new supply. Hence the value im-
posed upon this new supply by the new and lower wants
to which it appeals, fixes the value of the whole supply,
and not its cost of production, and the marginal cost of
production must assimilate itself to this new value.
Similarly, if the desire for a commodity declines, the
cost of production will tend to assimilate itself to the
lower value. Marginal producers, i.e. those who produce
at the highest cost of production, and who find the new
value unprofitable, will curtail and eventually abandon
production. A lower cost of production thus forms the
margin, while the lessened supply may and ultimately will
produce a higher marginal utility, either preventing a
further fall in value or raising value again. From both
ends, therefore, tendencies arise which assimilate the cost of
production to the new marginal utility of the product. It
is not the cost of production, but the anticipated value of
the product, which is the dynamic force and determines
I the course of industry. For cost of production, that is
the sum of exertions, merely acts as a brake ; the active
cause of all economic actions is consumption, the satis-
j faction of human desires, the well-being of man.
CHAPTER III
ORIGIN AND NATURE OF CAPITAL
Socialism posits private ownership of capital as the cause
of all or nearly all social injustice. Capital and capitalism
are the terms most frequently encountered in its literature,
and they are the favoured objects of denunciation. It
might, therefore, be supposed that the Socialism which
claims to be "scientific" had made a close and serious
study of the thing capital — that it had analysed it and
clearly conceived what it is. Yet, strange to say, the
opposite is the case. The endless mass of socialist litera-
ture which overburdens the student contains but few
attempts at any definition of capital, and not one serious
attempt to determine its nature and functions. Not one
makes any distinction between capital, which is the result
of labour applied to natural objects, and monopolies,
which are the creation of legislative enactments ; and,
though land and capital are frequently difFerentiated, such
difference is not infrequently denied, either directly^ or
indirectly.* The few definitions of capital to be found in
socialist literature all suffer from the same fault. The
most important of these is that of Karl Marx, who
^ ^ When we consider what U usually called capital, we are at a loss to disentangle it
from land, as we are to find land which does not partake of the attributes of capital." —
Fabian Tract No. 7, Capital and Land,
' ** I know that it has been sometimes said by socialists : * Let us allow the manu-
fisctnrer to keep his mill and the Duke of Argyle to keep his land, as long as they do
not ate them for exploitation by letting them out to others on condition of receiving a
part of the wealth created by these others. . . .' Unluckily there are no unappropriated
acres and factory sites in England sufficiently advantageous to be used as efficient substi-
tutes for those upon which private property has fastened." — Fabian Essays, pp. 139, 140.
ThtPitieio frincipii^ substituting "factory sites " in the second sentence for "mills "
in the first, is a sleight-of-hand, characteristic of the manner in which prominent
soctalists endeavour to obscure the land question.
78 DEMOCRACY VERSUS SOCIALISM partii
devotes a chapter of Capital to its elucidation,^ and from
which the following statements are extracted : —
" The circulation of commodities is the starting-point
of capital. The production of commodities, their circula-
tion, and that more developed form of their circulation
called commerce, these form the historical groundwork
from which it rises. ...
" As a matter of history, capital, as opposed to landed
property, invariably takes the form at first of money ; it
appears as moneyed wealth, as the capital of the merchant
and the usurer. But we have no need to refer to the
origin of capital in order to discover that the first form of
appearance of capital is money. We can see it daily
under our very eyes. All new capital, to commence with,
comes on the stage, that is, on the market, whether for
commodities, labour or money, even in our days, in the
shape of money that by a definite process has to be trans-
formed into capital."
This process of transformation is thus described : —
" The simplest form of the circulation of commodities
is C — M — C, the transformation of commodities into
money, and the change of the money back again into
commodities, or selling in order to buy. But alongside
of this form we find another specifically different form :
M — C — M, the transformation of money into com-
modities, and the change of commodities back again into
money, or buying in order to sell. Money that circu-
lates in the latter manner is thereby transformed into,
becomes capital, and is already potentially capital. . . .
"In the circulation C — M — C, the money is in the
end converted into a commodity, that serves as a use-
value ; it is spent once for all. In the inverted form
M — C — M, on the contrary, the buyer lays out money in
order that, as a seller, he may recover money. By the
purchase of his commodity he throws money into circula-
tion, in order to withdraw it again by the sale of the same
commodity. He lets the money go, but only with the
sly intention of getting it back again. The money, there-
fore, is not spent, it is merely advanced. . . .
^ Tk* General Formula fir Capital, voL i. Part II. chap. iv.
<:h. Ill ORIGIN AND NATURE OF CAPITAL 79
"The circuit C — M — C starts with one commodity
and finishes with another. Consumption, the satisfaction
of wants, in one word, use-value, is its end and aim. The
circuit M — C — M, on the contrary, commences with
money and ends with money. Its leading motive, and
the goal that tracts it, is, therefore, mere exchange-
value. . . .
"To exchange ;^ioo for cotton, and then this cotton
again for ;^ioo, is merely a roundabout way of exchang-
ing money for money, the same for the same, and appears
an operation just as purposeless as it is absurd. One
sum of money is distinguished from another only by its
amount. The character and tendency of the process
M — C — M is, therefore, not due to any qualitative differ-
ence between its extremes, both being money, but solely
to their quantitative difference. More money is with-
drawn from circulation at the finish than was thrown into
it at the start. The cotton that was bought for ^ 1 00 is
perhaps resold for ^100 plus ;Cio or >^iio. The exact
form of this process is therefore M — C — M', where
M' = M^ — M= the original sum advanced plus an in-
crement. This increment or excess over the original
value I call surplus-value. The value originally advanced^
therefore^ not only remains intact while in circulation^ hut
adds to itself a surplus-value or expands itself. It is this
movement that converts it into capital, . . .
"As the conscious representative of this movement,
the possessor of money becomes a capitalist. . . .
" It (value) differentiates itself as original-value from
itself as surplus-value, as the father differentiates himself
from himself qua the son, yet both are one and of one
age ; for only by the surplus-value of £10 does the ^^loo
originally advanced become capital: . . . M — M', money
wluch begets money — such is the description of capital
from the mouths of its first interpreters, the mercantilists.
" Buying in order to sell, or more accurately, buying
in order to sell dearer, M — C — M' . . . is therefore in
reality the general formula of capital as it appears prima
facie within the sphere of circulation.*' ^
1 The italics are ours.
8o DEMOCRACY VERSUS SOCIALISM partii
Apart from such misconceptions as the one that all
capital makes its first appearance in the form of money,
which do not concern us here, the foregoing quotations
make quite clear Marx's conception of capital, viz. that
it consists of all valuable things which yield an income to
their possessors, and that it excludes all such things which
either permanently or temporarily yield no income. The
italicised sentences leave no shadow of doubt as to this
meaning. No distinction is, therefore, made by him
between the use of money (to adhere to his term) in
directions which, while yielding an income to its possessor,
add to the general income of the social body, and between
the use of money which yields to its possessor an income
which is deducted from the general income of the social
body.
Moreover, the tenor of the argument implies that
all incomes from capital are uncompensated deductions
from the general income, that " buying in order to sell,"
inclusive of the transactions of manufacturers who buy,
say cotton in order to sell yarn, is an activity which
renders no service whatever. That this view is fully held
and deliberately enforced by Marx is not only shown in
the development of his surplus-value theory, but also in
the following reference to capital : —
" We know that the means of production and subsist-
ence, while they remain the property of the immediate
producer, are not capital. They become capital only
under circumstances in which they serve, at the same
time, as means of exploitation and subjection of the
labourer." ^
Here Marx still pursues the same theory, though the
change in expression makes its meaning more clear. The
only characteristic which differentiates capital from general
wealth is its use as a " means of exploitation and subjec-
tion of the labourer." Anything not so used is not
capital, and any income derived from capital is therefore
" exploited " from the labourer.
Apart from the confirmation of the deductions made
from previous quotations, which this passage yields, it
* Capital^ p. 792.
cH.iii ORIGIN AND NATURE OF CAPITAL 8i
leads to curious results in another direction. For, if true,
any machine or other instrument of production which for
the time being is not used, or is used by an immediate
producer, say a farmer, is not capital. If the farmer
engages a workman to drive the engine it becomes capital.
A cotton-mill worked by a Co-operative Society could
not be capital ; if worked by a private employer it might
be capital, provided it returned a profit ; but if worked at
a loss it could not possibly be capital. For, obviously,
neither in the co-operative mill nor in that worked at a
loss, are ** the means of production used as the means of
exploitation and subjection of the labourer," while in the
private mill, returning a profit, they may be so used. As
reasonably may it be held that a gun is not a firearm if it
is used for shooting game, but if it is used for shooting a
man, then it becomes a firearm.
The foregoing examination proves that Marx made
no attempt to find out what capital is, but that he framed
his definitions to suit certain deductions which he desired
to make from them.
La Proprietiy by Paul Lafargue, furnishes (p. 303)
another definition, viz.: —
"Under capital one understands all property which
aflbrds interest, rent, income, or profits."
Lafargue also, therefore, makes no distinction what-
ever between land, labour-products, and monopoly-rights,
but classes them all as capital. But subsequently he limits
this generalisation as follows : —
** A sum of money put at interest is capital ; any
instrument of labour (land, weaving-looms, metal works,
ships, etc.) used not by its proprietor, but by salaried
persons, is capital. But the land which is cultivated by
its peasant-owner with the aid of his family, the poacher's
gun, the fisherman's boat . . . although they are property,
are not capital."
This, however, is not merely a limitation, but an
absolute contradiction of the principal proposition. For
if "all property which affords . . . income or profits"
is capital, then the peasant-proprietor's land and the fisher-
man's boat also are capital, if they " afford an income or
82 DEMOCRACY VERSUS SOCIALISM partii
profit " to their owners when used by them, which gener-
ally is the case.
Moreover, according to this limitation, land is not
capital if the owner and, say, two sons work it ; but
should one of the three be injured, so that a hired man
must be engaged to take his place ; or should threatening
weather at harvest-time compel the engagement of an
additional worker so as to hasten the operation, then it
would at once become capital and the proprietor a
capitalist.
Laurence Gronlund, in The Co-operative Commonwealth^
gives the following definitions, pp. 29, 30 : —
" We, therefore, mean by capital that part of wealth
which yields its possessors an income without work." . . .
" Capital is accumulated fleecings, accumulated, withheld
wages."
This view is supported by a greater authority,
Frederick Engel, who, in Socialism^ Utopian and Scientific^
p. 43, states . —
" The appropriation of unpaid labour is the basis of
the capitalist mode of production, and of the exploita-
tion of workers that occurs under it ; even if the capitalist
buys the labour-power of his labourer at its full value as
a commodity on the market, he yet extracts more value
from it than he paid for ; and in the ultimate analysis
this surplus-value forms those sums of value, from which
are heaped up the constantly increasing masses of capital
in the hands of the possessing classes."
These definite statements embody most clearly the
general conception which socialist writers and teachers \^sh to
convey, viz. that capital, privately owned, not merely robs
the workers, but is itself stolen from them, and that any
property which yields an income without work is capital.
It cannot be denied that socialists, as well as any one else,
have a perfect right to define the terms they use as seems
good to them, provided the definition is consistent within
itself, and is not subsequently departed from. Whether
the definition is useful, or whether it tends to obscure the
facts under consideration, is, however, another question.
The definitions before us embrace objects, the origin.
CH. Ill ORIGIN AND NATURE OF CAPITAL 83
nature, and influence of which difi^er so widely from each
other, that their agglomeration under one definition has
consequences of the most misleading and mischievous char-
acter. The present chapter will be devoted to the eluci-
dation of what, in contradistinction to monopoly-rights and
other spurious forms of capital, may be called real capital,
leaving the treatment of the former as well as of land to
subsequent chapters.
All the useful things which constitute wealth are the
result of human exertion exercised upon matter in the
direction of changing its form or relation so as to fit
it for the satisfaction of human desires. But not all such
exertion adds to the stock of wealth. Apart from all
other cases, it is obvious that labour directed towards the
immediate satisfaction of desire fails to do so. For if a
man gathering berries puts them into his mouth and eats
them, there is no production of wealth ; but if instead he
puts them into a basket for subsequent use, the stock of
wealth is increased. In order, therefore, that such a simple
form of wealth as berries should be produced, some labour
had to be expended in advance on the production of
something not wanted for its own sake, and unable of
itself to satisfy desire.
Take another case. A man, wanting water from a
spring at some distance from his hut, may satisfy his
desire by going there and raising the water in his bent
hand till he has quenched his thirst. But if he takes a
{nece of wood, hollows it out with fire, and attaches a
handle made of twisted reeds, he not only can obtain more
water, but can carry it to his hut where it is wanted.
Manifestly, however, in order to obtain this greater
quantity of water, and in order to carry it where it was
wanted, he had to proceed in a roundabout way — that is,
he had first to make something for which he had no
cUrect desire, a pail. If he now wants more water still,
he may cut down a tree, saw it into boards, make these
boards into a flume, and along this channel an infinitely
greater amount of water will be carried to his hut by
gravitation, i.e. without any further exertion on his part
than that of occasionally keeping the flume in order.
84 DEMOCRACY VERSUS SOCIAUSM partii
To obtain this greater supply with less labour, he had,
however, to go about the work of producing the water in
a still more roundabout way. He had to quarry iron-ore
and flux, construct a smelter, smelt the ore into iron,
then produce a forge and shape the iron into axe and
saw, then fell a tree, saw it into boards, and finally make
these into a flume.
It is true, that if one man had to do all this in order
to obtain water for his own use, the greater quantity of
water thus obtained would not requite him for the labour
expended in his roundabout process. But if thousands of
men work in co-operation extending over time and space,
some quarrying ore and flux and coal ; some constructing
smelters and forges ; others smelting the iron, which
others again shape into axes, saws, and other appliances
wanted in various industries ; if other men, again, fell trees,
and still others saw them into boards for the manifold
purposes for which boards are wanted, then the man
wanting boards for a flume can obtain them through
exchange with such a small expenditure of labour, that the
construction of a flume may be very profitable to him.
It is also obvious that the greater supply of water which
he will now obtain is entirely due to the roundabout and
co-operative process of producing the water, which began
with the mining of the ore, which was carried on by
several exchanges of intermediary products, and closed
with the exchange of boards for something produced by
the labour of their consumer.
The above case is illustrative of the fact that a greater
result is obtained by the roundabout process of production
than by the direct process. In by far the greater number
of productive processes, however, the roundabout process is
the only one possible. In the pastoral industry, whether the
final product aimed at is meat, wool, or milk, it is obvious
that no product can be obtained except indirectly. Animals
must be bred and reared ; in cold climates shelter must
be built for them ; fodder must be grown, and various
other processes must be performed, before either meat
wool, or milk is produced. Similarly, before wheat or
any other product of agriculture is obtainable, some sort
CH, III ORIGIN AND NATURE OF CAPITAL 85
of agricultural implements must be constructed, land
must be cleared and prepared, seed must be sown, and
other processes performed before the harvest can be
gather^.
In every kind of manufacture the roundabout process
is equally obligatory. In the manufacture of bread from
wheat, some sort of a flour-mill and some kind of an oven
must be made before the final process of baking the bread
<:an be undertaken.
Similarly, before hides will emerge in the shape of
boots, many tools must be constructed and processes
undertaken ; and even the most primitive manufacture
of clothing requires at least a spinning-wheel and some
sort of a loom, involving the antecedent labour of their
construction.
The absolute necessity of this roundabout process is,
however, still more apparent in the higher branches of
manufacture. If any one will think out for himself the
manifold processes required before a steel pen, a watch, a
pocket-knife, or a pair of spectacles make their appearance,
he will find that the extension in time and space of the
co-operative, roundabout process involved, is as far-reach-
ing as it is indispensable.
We have now arrived at these conclusions : —
In some processes of production, the intermediary
production of goods not in themselves capable of satisfying
desire, leads to a greater production of the desired goods
with the same exertion, or to an equal production of them
with less exertion.
In by far the greater number of productive processes,
the intermediary production of goods not in themselves
capable of satisfying desire is the indispensable condition
or the production of the desired goods.
This roundabout process of production, whether
merely advantageous or indispensable, requires the co-
operation of many producers through exchange ; not
only through the exchange of the final product, but
through the exchange of many intermediate products as
well.
Two further conclusions, however, must be drawn.
86 DEMOCRACY VERSUS SOCIALISM partii
It was seen that when a man substituted a pail for his
hand, the produce of his labour was increased through the
extension of the process of production in time. When
for the pail he substituted a flume, there was a further
increase, but at the expense of still greater delay between
the initiation of the productive process and the appearance
of the product. This holds true throughout all produc-
tion. The more roundabout the process, that is, the
more goods not in themselves desirable are interposed
between raw matter and final product, the more energies
and powers of matter are set to work for man's satisfac-
tion, and the greater is the result of his exertion.
And further : The more roundabout the process of
production, the more specialised becomes every part of it.
With this greater specialisation there comes an increase in
the forms and quantities of intermediary products, and
consequently a greater number of exchanges. Not only
does the co-operative, roundabout process depend upon
exchanges for its existence, but as it is extended, so
exchanges multiply. Moreover, the process of production
is not completed till the ultimate exchange of the final
product has taken place, i.e. till it is in the hands of
consumers. The end and purpose of all production being
the satisfaction of human desires through consumption,
production only ends where consumption, the satisfaction
of desire, begins. And just as coal cannot satisfy human
desires till it is brought to the pit's mouth by the labour
of the miner, so if it is not wanted there, it still fails to
satisfy desire till the coal-merchant and sailor, or other
carriers, have brought it to a city, and till the retailer and
carter have delivered it in somebody's backyard who
wants to burn it. From beginning to end of the round-
about, co-operative process of production, exchange is
thus its indispensable condition. It is the bond which
gives aim and purpose to the separate and individual
efibrts of all the co-operators.
The foregoing examination has made clear the nature
of capital. It consists of all those forms of wealth which
are produced, not for the direct satisfaction of the desires
of the producer, but for their indirect satisfaction, through
CH. Ill ORIGIN AND NATURE OF CAPITAL 87
the assistance which they render in the satisfaction of
desire, either as material, instruments, or final product ;
till, when the productive process is completed by delivery
of the final product to its ultimate consumer, this final
product loses the special character of capital and becomes
simply wealth. Capital is thus seen to consist of labour-
products, and it must be obvious that to press under the
same description privileges, rights, and possessions, which
arc not the produce of labour, because their possession
entails some consequences akin to those which arise from
the possession of capital, is as misleading as to class
canaries amongst herbivorae because they like to nibble
lettuce leaves.
It is similarly made clear that what differentiates
capital from other wealth is not its use " as means of
exploitation and subjection of the labourer," but the
relation in which it stands to ultimate human desires, and
that this relation is not aflfected by the question whether
the thing is " the property of the immediate producer "
or of anybody else, whether it is actually used, or whether,
for the time, it remains unused.
Capital, like all wealth, is the produce of labour and
land. If capital is " accumulated fleecings," i.e. if it is
stolen from labour, then all wealth not owned by labourers
is equally stolen. That no one can morally obtain wealth
without rendering services in return is absolutely true.
But it is not true that no one can morally obtain wealth
without producing it. Doctors, lawyers, scientists, publi-
cists, and journalists, even socialist ones, no more produce
wealth than do singers or actors. But they render services
to the wealth -makers, for which the latter are willing
to exchange wealth. The socialist denunciation of the
capitalist as a robber, because as a capitalist — apart from
organiser or manager — he does not produce wealth, is,
therefore, illogical. The question is not whether he
produces wealth, but whether he renders services to the
wealth-makers which entitle him morally to a share in
the wealth produced. Here, again, the distinction — un-
recognised by Socialism — between the capitalist and the
monopolist is of the utmost importance. The monopolist,
88 DEMOCRACY VERSUS SOCIALISM partii
as such, renders no service ; the capitalist, as such, does,
as will be shown in the chapter on interest. That, as long
as monopolies exist, the reward which capitalists, as well
as employers, obtain for their services may, in the aggre-
gate, be excessive, is true. This, however, is not neces-
sarily an inevitable outcome of the private ownership of
capital and the private conduct of non-privileged indus-
tries, but may be, and, as will be shown, is a secondary
result of legalised monopoly. Even if this were not the
case, it would not justify the assertion that all the earnings
of capital are stolen from labour. Nor does the un-
doubted fact that a considerable part of existing capital
consists of accumulated tribute exacted from labour by
monopolists justify the assertion that " all capital is ac-
cumulated fleecings," and still less does it justify "the
exploitation of the labourer " to be made the determinat-
ing characteristic of capital.
The denunciations which Socialism directs against the
capitalistic form of production as " unorganised, chaotic,
and anarchic," may justify a slight digression in their
refutation, which the foregoing description of the round-
about process of production makes almost superfluous.
Man lives in a world in which nothing is ever at rest.
Every particle of matter is constantly being acted upon
by other particles of matter, and is reacting upon yet
other particles. As the result of these ceaseless activities,
there appear energies, such as motion, gravitation, heat,
electricity, chemical actions, and the mysterious principle
which we call life. The sum of these energies, which
nature pours out in ceaseless flow and inexhaustible quan-
tities, without any assistance from man, is the productive
endowment of man. From it he draws as much as his
knowledge enables him and his wants necessitate, to assist
him in satisfying his desires. Where man confines himself
to production for immediate or almost immediate con-
sumption, he makes use of a minimum only of nature's
energies, and, as a consequence, the produce of his labour
is small ; as he lengthens the process of production,
enlisting more and more of nature's energies, and at more
frequent intervals, the produce of his labour increases.
CH. Ill ORIGIN AND NATURE OF CAPITAL 89
The increase in product is not necessarily proportioned to
the increase in the length of the process. On the con-
trary, after a certain point is passed, every additional
stage interposed between the beginning and end of a
productive process may give a somewhat less increase of
return than the previous one. There is, however, always
an increase, against which advantage must be placed the
disadvantage of increase of time.
It follows that a community which adopts the round-
about or capitalistic form of production, thereby enor-
mously and progressively increases its power to satisfy
wants ; and further, that such a community consumes
each year but a small part of the fruits of the labour of
that year, i.e. that it mainly lives on the labour-results of
past years which mature during the present year, while
directing the greater part of its present efforts towards
results which will mature in future years. The longer
the process of production, the greater will be the degree
of capitalism, the further off will be the time of maturity
of present efforts, and the more ample will be their reward.
In this sense, therefore, capital is the symptom as well as
the cause of profitable production ; it exists, because a
people, producing more profitably, can postpone to later
dates the consumption of the fruits of present efforts.
The natural agencies imprisoned in capital and com-
manded by it enable man to give part of his labour to
the imprisonment of more natural agencies which shall do
his future work.
This process of roundabout or capitalistic production
is made possible through the voluntary co-operation of
'^t numbers of men, extending in time and space, a
co-operation of their physical as well as of their mental
powers. Two kinds of co-operation are possible. One
is the co-operation of many men, who, for the time,
abandoning most of their mental activities, obey the will
of one man in their physical exertions, leaving mental
guidance to the one. This is the compulsory co-operation
at which Socialism aims. The other is a voluntary co-
operation, where every man more or less utilises both his
physical and mental powers in the production of goods,
90 DEMOCRACY VERSUS SOCIALISM part ii
which, through the act of exchange, shall satisfy the
desires of all of them. This is the capitalistic system,
world-wide in its extension, upon which our civilisation is
based. While socialistic, i.e. enforced co-operation, tends
to the repression of the mental energies of most of the
co-operators, this voluntary co-operation tends to excite
them, and thus, in its results, no less than in its character,
far surpasses the former. Capitalistic production, so
contemptuously called chaotic and anarchic by the men
who cannot conceive of any co-operation except that
which is enforced, and of which the lowest savage is
capable, is, in reality, the most marvellous system of
co-operation which the human mind can conceive ; a
voluntary, world-wide co-operation of independent units,
which alone has enabled mankind to raise itself above a
state of savagery, which has enormously increased the
sum of human happiness, and which, when freed from the
incubus of monopolism which the interference of the State
has grafted upon it, will lift mankind above want and the
fear of want into a sphere of as yet unimaginable intel-
lectual and moral activity.
CHAPTER IV
THE ORIGIN AND NATURE OF SPURIOUS CAPITAL AND
SPURIOUS INTEREST DEBTS AND MONOPOLIES
Having ascertained the origin and nature of real capital,
we may now investigate those of spurious capital, which is
nearly always confounded with it by socialist writers.
Even those among them who occasionally distinguish
between capital and monopoly, invariably assert that the
latter is an inevitable outcome of the private possession
of capital ; that capitalism must invariably evolve into
monopoly, and that this evolution cannot be prevented
except by the socialisation of capital.^ As far, however,
as the present writer knows, no socialist has ever attempted
to prove this assertion. The nearest approach to it are
attempts, such as that made in the second quotation cited,
to prove that private ownership of the raw material of the
earth, i.e. land, leads to monopoly, and then presume to
have proved that capitalism, i.e. the private ownership of
capital, does so.
It cannot be denied that monopolies may have their
origin in legal enactments which are unconnected with the
private ownership of capital and the private conduct of
industries, and it may, therefore, be that all, or nearly all,
^ ^ As sin when it is finished is said to bring forth death, so capitalism when it is
finished brings forth monopoly. And one might as well quarrel with that plain fact as
blame thorns because they do not produce grapes, or thistles because they are barren of
figs.'* — Fabian Essays^ pp. 93, 94.
^* Granted private property in the raw material out of which wealth is created on a
huge scale by the new inventions which science has placed in our hands, the ultimate
efiect must be the destruction of that very freedom which the modem democratic State
potitfl as its first principle. . . . Thus capitalism is apparently inconsistent with
democracy as hitherto understood." — IhiJ. p. 98.
92 DEMOCRACY VERSUS SOCIAUSM part ii
forms of monopoly owe their existence to this cause. At
any rate, no honest conclusion as to the connection
between capitalism and monopoly can be arrived at till all
monopolies, which obviously exist through special legal
enactments, are separated from those for which no such
cause can be discovered. An endeavour to do this forms
part of this and the following chapter.
The legal rights, which in some respects simulate
capital, are either rights of debt or monopolies. Their
similarity to real capital is, however, confined to the facts
that, like real capital, they may be exchanged and may
yield an income to their possessors. In every other
respect they absolutely differ from real capital.
A right of debt arises when existing wealth is exchanged
tor a legal right to demand other wealth at a future date.
The wealth to which the legal right refers may be in
existence at the time the exchange takes place, or it may
come into existence at some future date. But whether
it already exists or not, the mere engagement of the
borrower to hand over wealth to the lender at some
future date does not add to the existing stock of wealth
or capital. The stock is the same before and after the
loan is made ; nay, not infrequently, the wealth by which
the right of debt has been purchased has disappeared
before the right terminates. To illustrate : A, a manu-
facturer, sells goods to the value of ;^ioo to B, a whole-
sale merchant, on credit ; B sells these same goods on
credit to C, a shopkeeper, for ;^ 1 20 ; C sells these same
goods on credit to his various customers, the ultimate
consumers, for ;^i6o. The capital has then disappeared,
but it is represented by legal rights of debt, aggregating
no less than £3^0.
This element is so conspicuous in the greater part of
all public debts as to approximate the same to monopolies.
The National Debt of Great Britain is a case in point.
The wealth originally borrowed has disappeared without
leaving any material representatives, such as part of the
wealth borrowed by a railway company finds in the road,
rolling-stock, and other labour-products on which it was
expended. All that exists, and all that was originally
CH. IV SPURIOUS CAPITAL AND INTEREST 93
purchased by the lenders, is a claim on the labour of the
people of Great Britain — the right to demand a share in
the revenue which Government extracts from them by
taxation.
Unlike real capital, therefore, rights of debt can render
no service, can give no assistance in production. The
capital with which they were purchased may have rendered
such service in the past ; if it was used productively, its
representative may be rendering such service in the
present ; but the right of debt can render no such service
at any time. It is a mere claim to wealth or capital, and,
therefore, in its origin and nature so different from capital
that the application of the same term to both must lead to
the utmost confusion of thought.
It is the same with shares and similar documents.
These are mere certificates of part-ownership in capital or
legal rights. The share itself has no value apart from the
capital or legal right to which it refers. .Mere duplication
of the number of shares, though it may deceive some into
the belief that the capital which the shares represent has
been duplicated, has no influence whatever on the amount
of capital in existence. But because the legal possession
of the share entitles its holder to part of the income earned
by the use of the capital or by the exercise of the legal
right to which it refers, therefore it is confounded with
capital.
Legal rights of debt, such as book-debts, promissory
notes, bills of exchange, bank-notes, treasury bills, deben-
tures, mortgages, government and municipal bonds, as
wdl as certificates of part or full ownership, such as shares
and certificates of title, are, therefore, not real capital.
It must, however, be admitted that they are inseparable
fi*om private ownership of capital and wealth, and the
writer must also provide against the supposition that he
objects to the existence of such rights. Though they are
not capital, they, with the sole exception of public debts,
the creation of which does involve injustice, are legitimate
complements of the private ownership of wealth. For a
private debtor has himself received the wealth the purchase
of which created the obligation, or has voluntarily taken
94 DEMOCRACY VERSUS SOCIALISM part ii
upon himself the obligation of the driginal debtor.
Whereas the wealth paid for public obligations was not
received by the taxpayers, but, at best, by one generation
of them ; nor was the wealth, so received, necessarily used
for the benefit of subsequent generations of taxpayers.
The moral right of a government to impose on subsequent
generations the duty of repaying debts incurred by it as
the representative of one generation is, to say the least,
doubtful. Its admission in full would justify one genera-
tion of men in enslaving all future generations by mortgag-
ing their productive power to the fullest extent, a doctrine
which carries with it its own refutation.
The essential character of all monopolies is, that,
without causing their possessors to be treated as criminals,
they enable them to exact wealth fi-om others without
rendering any service in return, or to exact more wealth
for such service as they do render than the recipients
could be compelled to yield if free competition prevailed.
A monopoly, therefore, must be established by law, or the
law must have failed to efficiently provide against it.
The principal legalised monopolies existing in civilised
countries to-day are : —
The private ownership of the land and of such treasures
as the land contains.
The privileged or exclusive use of land for certain
purposes.
Legal limitations of competition in certain industries
and professions.
The most fundamental of these monopolies is that
of the land, inclusive of minerals, water-power, and other
natural agencies. As all socialists admit as much it is
not necessary to dwell at length on this kind of monopoly
here, all the more as it will be dealt with exhaustively in
subsequent chapters. Two phenomena, which are not
generally understood, ought, however, to be explained
here.
In the heart of the city of Melbourne is a block of
land, which, except that the trees which grew upon it have
been cut down, is in exactly the same state as when the
blacks roamed over the site of the future city. No labour
CH. IV SPURIOUS CAPITAL AND INTEREST 95
has ever been expended on it ; no wealth has ever been
created there. Fifty years ago the present owner of the
land paid ^57 for it to the government ; lately he was
offered and refused ^60,000 for the same land. What is
the cause of this increase in the value of this land } It
is this. When the land was originally sold, Melbourne
was a village on the outskirts of the wilderness, and no
one would have given the owner more than £3 ^ year for
the privilege of using it. Since that time the country has
been populated, the soil has been subjected to the plough,
roads and railways, centring upon Melbourne, have opened
the interior of the country, and as a consequence Melbourne
has become a great trading centre. The volume of trade
has enormously increased, and with it has increased the
demand for such land as gives access to trading facilities.
Any one wanting a trading location, such as this land
presents, therefore, is compelled, and can afford, to pay at
least ^2000 a year for the privilege of using it. The
owner of this land has taken no part in the activities
which have resulted in the value which his land now
possesses. Even if he had he would have done so as a
worker and not as an owner, and would have earned no
mwe title to this land-value than any like worker who is
not a landowner. For reasons which do not concern us
here the owner of this land has never made use of his
power to levy a tribute of ^2000 a year upon the industry
of the Victorian people without rendering them any service
in return. He has preferred to withhold from his fellow-
ddzens the privilege of using this specially favourable
opportunity to produce wealth. But he can exact this
tribute any time he chooses, and therefore he can sell the
power to do so, the annual value of the land, for ^60,000.
This sum of ^60,000 is now considered to be part of the
wealth of the country. As a matter of fact, it is neither
wealth nor capital, but the capitalised value of the power
to levy tribute from labour and capital without rendering
or having rendered any service in return.
Moreover, this power of landowners to exact tribute is
not conferred upon them by any past services of the com-
munity, but by its present and anticipated future services
96 DEMOCRACY VERSUS SOCIALISM part ii
and necessities. The frequently ephemeral gold-fields of
Australia illustrate one phase of tins feature. As long as
the field promises well and the population increases, the
value of land in the vicinity rises, and frequently rises
enormously. As soon as its disappointing nature is ascer-
tained, and the exodus of the population has begun, the
value of the land begins to decline again, and if the field
is altogether unremunerative, the land declines to its former
grazing value.
The concentration of roads and railways upon any
centre enormously enhances the land-values there. Not>
however, because they have been built, but because they
continue to be used. If, acting similarly as Eastern
despots have acted, a government were to discontinue the
use of these roads by building sapping lines to another
centre to which the traffic was directed, land -values in
the old centre would decline, and would rise in the new
one. Hence it is clear that land-values are not the result
of past action, but the capitalised value of the tribute which
the present and anticipated future action of the community
enables landowners to impose upon the productive activities
of the people.
The value of all land, and not merely of that which is
withheld from use, is of exactly the same nature. To
revert to the former illustration, the great majority of the
owners of Melbourne land have made full use of their
power to levy tribute. They have either themselves built
on the land, or have sold to others permission to build
upon it against payment of ground-rent. Where this has
been done, wealth and capital, represented by the value of
the buildings, has been produced, and as presently will be
shown, the income derived from the letting of the buildings
is a legitimate return for services rendered. But apart
from the value of, and income from, such buildings, there
is in every case a value of, and an income from, the land,
which can easily be separated from the building value and
income. This land-value represents nothing but monopoly,
the right to levy tribute from labour for the privilege of
using advantages not created by the owner of the land,
but which are being created by the community of which
CH. IV SPURIOUS CAPITAL AND INTEREST 97
his tenants form part as well as himself, if he is not an
absentee, as frequently is the case.
This power to levy tribute from building, agricultural,
and mining land, as well as from land put to other uses,
becomes capitalised on the basis of the prevailing rate of
interest, and the capitalised value of the privilege becomes
the value of the land. Where rent or royalty is paid by
the users of the land, the difference between the tribute
and interest, between the land-value and capital, is com-
paratively obvious. Where, however, the owner himself
uses the land, and still more, where the land is used by a
number of part-owners, as, for instance, a mining company
owning the mine, the distinction is less easily observed.
Nevertheless it is there. In addition to the income which
the freehold farmer derives from his labour, he receives
one which arises from the use of land made more pro-
ductive by the community in which he lives. This part
of his income can easily be separated from the rest, and
forms the basis of the capital value of his land, apart from
the improvements. Similarly, the monopoly value of a
mine consists of the capitalised value of the royalty which
could be obtained for it, and can be easily separated from
the capital of the company, i.e. mine improvements, ore
at the pit's mouth, buildings, machinery, or money.
All these monopoly values, easily separated from real
capital, are obviously spurious capital. They are not the
result of past labour, but of legal privilege. Their value
does not arise, as that of real capital, from services which
they render in production, but from the power to levy
toll upon production. Yet socialists generally class these
monopoly values as capital, and treat the tribute, the
spurious interest upon which they are based, as of the
same nature as real interest.
The second form of legal monopoly consists of the
privileged or exclusive use of specially valuable land, such
as is granted to railway, canal, and tramway companies ;
to the purveyors of gas, water, electric light, pneumatic
and hydraulic power, and similar undertakings based upon
l^al privileges. Every such undertaking, in addition to
the legitimate return for the services which it renders,
H
98 DEMOCRACY VERSUS SOCIALISM partii
possesses the power, in esse or posse^ to levy toU from those
who avail themselves of their services, and the capitalised
value of this toll is mistaken for real capital.
To show the essential nature of the tribute which
such monopolies may claim, the following illustration will
serve : —
Suppose Government were to grant to me the right to
erect gates at all the points giving entrance to the city of
London, and to charge one penny to any one who passed
through these gates. Suppose also that experience had
shown that, on an average, the annual income from this
toll was ^500,000. If the prevalent rate of interest were
4 per cent, the capital value of the privilege would be
j^ 1 2,500,000. I could sell it for that sum, and whether
I sold it or not I would be considered to be possessed of a
capital of j^ 1 2,500,000. As a matter of fact, I would have
no capital. All I possessed would be this legal privilege
to levy tribute.
If now the number of persons desiring to enter the
city of London were to increase, the income from the
privilege would increase as well, and with it would rise
the capital value of it. Nay, the mere expectation that
such increase of traffic would take place in the future would
add to the present value of this privilege.
Every successful undertaking of the kind enumerated
above possesses, in addition to the value of its capital, some
monopoly value of the kind above described.
Consider a railway company. The capital of the under-
taking consists of the present value of the road — improve-
ments, plant, buildings, material, etc., less such wear and
tear as they have undergone. Suppose any one were to
offisr to buy any English railroad on such a valuation, or
«ven on the value for which all its capital might be replaced
now, without deducting anything for wear and tear. The
directors would certainly regard him as a lunatic. Yet if
any one offered to buy an ordinary factory of similar age
on such terms he would be received with open arms.
Whence then the difference ? It arises from the fact that
the Legislature has given to the railway company a special
privilege, i.e. the exclusive use of a narrow strip of land
CH. IV SPURIOUS CAPITAL AND INTEREST 99
hundreds of miles long, unbroken by any roads or other
rights of use. Having the exclusive right of use to this
land, the railway company can charge more for carrying
goods and passengers over it than if competing carriers
were allowed to run trains over it.^ The difference between
competitive rates and the monopoly rates which the com-
pany now charges is a toll on industry as much as the toll
levied at the gates in the preceding illustration. Capital-
ised, this toU forms part of the value of every railway
stock. The value of railway shares is thus composed,
partly of the value of the capital employed in the under-
taking, and partly of the capitalised value of the legal
power to levy tribute.
Some of the American tramway companies lend them-
selves to a detailed illustration of this feature of monopoly,
because the facts have been carefuUy ascertained. To take
only one example. Mr. Lee Meriwether, Commissioner
of Labour, Missouri, reports as follows with regard to the
tramways in St. Louis : —
The amount expended in buildings, inclusive of the
cost of their site, and in building the lines and equipping
them, is estimated at $8,415,360. The total capitalisation
of the lines he states to be $38,437,000, and the dividends
psud in the preceding year (1804) as $1,962,468. The
value of the undertaking, therefore, exceeds the value of
the capital employed by more than $30,000,000. The
dividend, calculated upon the value of the capital, amounts
to more than 23 per cent. Obviously, if such a business
were open to competition, other companies would start,
and the rates of carriage would be quickly reduced. But
as the existing companies have been granted the exclusive
right of using the streets for tramway purposes, no com-
petition is possible ; and this exclusive privilege, enabling
the companies to charge monopoly rates, is valued at over
^ The monopoly resides in the ownership of the road, not in the conduct of the
traffic. There can be no more objection to allowing any person or company to run
trains over State lines of railway competing for the traffic than there is to allowing
jM-ivate traffic for hire on public roads and streets. The difficulties in the way of
regulating the traffic and ensuring safety are not insuperable, as is shown in those cases
where competing companies have running powers over the same roads. The advantages
of inch a system are obvious and great. The same considerations apply to tramways
md canals.
loo DEMOCRACY VERSUS SOCIALISM partii
$30,000,000, and is regarded as capital by socialists just
as much as the cars and rails and buildings of the com-
panies.
Even where the legal right to use the streets is not
exclusive, but merely privileged — as, for instance, in gas,
electric light, and similar companies which have been
accorded the right to lay their mains and cables below
the public streets — the impossibility of granting the same
privilege to every member of the community acts as a
deterrent to competition, and therefore produces monopoly
values. This tendency is increased through the fact that
wherever competition is limited combination is feasible.
The certainty that similar privileges cannot be granted
indefinitely enables competing companies for the supply of
gas, water, electricity, and similar commodities, as well as
competing railway companies, to amalgamate or pool their
receipts. The limitation of competition arising from
privileged use thus ultimately results in the elimination
of all competition, and in the establishment of the same
monopoly and the creation of the same monopoly charges
and monopoly values as where the legal privilege is
exclusive.
All such legal privileges, therefore, are more or less of
the nature of toll-gates ; their value is not a sign of the
existence of any real capital, but consists merely of the
capitalised value of a tribute which the possession of such
legal privileges enables their owners to exact from others,
without rendering service or adequate service in return.
CHAPTER V
THE ORIGIN AND NATURE OF SPURIOUS CAPITAL AND
SPURIOUS INTEREST — Continued
The third group of monopolies is one to which socialists
have given special attention, without, however, discovering
their origin. It consists of monopolies which have been
formed by the combination of capitalistic undertakings into
groups, called rings, trusts, syndicates, combines, or pools,
for the purpose of gaining control over a particular in-
dustry, and preventmg competition between themselves,
dther in the purchase of raw material or in the sale of
finished goods, or both, and in the hire of labour.
Socialists unanimously regard such combinations as the
natural and inevitable development of the private owner-
sMp of capital under modern industrial conditions. They
look forward to the universal prevalence of such combina-
tions, and regard State monopoly as the only possible
means of escape from these private monopolies.
As an illustration of this attitude, the following quota-
tion from The Fabian Essays will serve : ^ —
** I now come to treat of the latest forms of capitalism,
the * ring ' and the * trust,* whereby capitalism cancels its
own principles, and, as a seller, replaces competition by
combination. When capitalism buys labour as a com-
modity it effects the purchase on the competitive principle.
. . . But when it turns round to face the public as a seller
it casts the maxims of competition to the wind and pre-
sents itself as a solid combination. . . . The competing
persons or firms agree to form a close combination to keep
* Pp. 89, 90, and 93.
I02 DEMOCRACY VERSUS SOCIAUSM partii
up prices, to augment profits, to eliminate useless labour,
to diminish risk, and to control the output. . . . Com-
bination is absorbing commerce. . . . The individualist
... is naturally surprised at these rings which upset all
his crude economic notions, and he, very illogically, asks
for legislation to prevent the natural and inevitable result
of the premises with which he starts. It is amusing to note
that those who advocate what they call self-reliance and
self-help are the first to call on the State to interfere with
the natural result of that self-helpy of that private enterprise y
when it has overstepped a purely arbitrary limit." ^
If the writer of the above statement were right in his
assumption that such combinations as he deals with are
the natural and inevitable result of private enterprise, his
ridicule of individualists who call for legislation to combat
them might be justified. If, however, such combinations
owe their existence in almost every instance to legislative
interference with private enterprise, then the individualist
who calls for the removal of such legislative interference is
by no means ridiculous. That this is the case will be seen
from the following examination. Before entering upon it,
it may, however, be of interest to show that socialists
frequently reveal that they are not without some suspicion
that this may be the case. The writer of the above-
quoted statement, for instance, not only selects nearly all
his examples of rings and trusts from the United States,
but actually makes the following admissions : —
" The best examples of * rings * and * pools ' are to be
found in America,*' and "We must again travel to
America to learn what the so-called * trust * is." ^
Still more definite is the following admission, taken from
Hobson's Evolution of Modem Capitalism : * —
" In most of the successful manufacturing trusts some
natural economy of easy access to the best raw material,
special facilities of transport, the possession of some State
or municipal monopoly of market are added to the normal
advantages of large-scale production. The artificial
barriers in the shape of tariff, by which foreign competition
has been eliminated from many leading manufactures in the
^ The italics are ourt. ' Fabian Essays^ pp. 90, 94. ' P. 141.
CH. V SPURIOUS CAPITAL AND INTEREST 103
United States, have greatly facilitated the successful opera-
tion of trusts.**
Any examination of the facts fully bears out this state-
ment, i.e. that all, or nearly all, successful pools, rings,
trusts, syndicates, or whatever other denomination be
adopted by monopolistic combinations, owe their success
to the possession of some legal privilege — either the pos-
session of exceptionally productive land, or power over
routes of transportation, or other legislative exclusion of
free competition, or to a combination of such causes. So
largely is this the case that, even with regard to the few
instances in which the existence of such favouring causes
cannot be proved, the presumption of their existence is
very strong.
Legal limitations of competition in industries which,
not depending on special privileges, are by their nature
competitive, have been favoured devices of despotic rulers,
as well as of those interested in such industries, for their
own enrichment at the expense of the masses of the people.
The privileges of mediaeval trade-guilds, the monopolies
established by Tudor and Stuart kings, the mercantile
system, and last, not least, its modern offspring, the pro-
tective system, all have used and use the same device with
the same object, i.e. to enable certain producers to charge
higher prices for their products than they could compel
buyers to pay under the action of free competition.
The protective system renders this service to manu-
facturers within the protected area by placing duties on
competing foreign goods from which simUar goods made
within such area are exempt. Foreign goods being thus
artificially increased in price, the competing home manu-
facturers can either raise the price of their own goods to
the same level, in which case little or no exclusion of
foreign goods takes place ; or they can raise the price of
their goods to a level a little below that of the foreign
goods plus the duty, when the competing foreign goods
will be excluded, while at the same time a higher price for
locally-made goods is obtained. The large and exceptional
profit of such protected manufacturers, however, speedily
attracts rivals into the protected area, and, as a conse-
I04 DEMOCRACY VERSUS SOCIALISM partii
quence, the limited requirements within the area are either
overtaken, or threatened to be overtaken. This over-
production would speedily reduce prices and deprive
manufacturers of the exceptional profits, the promise of
which protection held out to them. The protective
system, however, supplies the remedy in the facility for
combination which it offers. Foreign competition being
excluded as long as the price is kept a little below that of
foreign goods plus the duty, the number of manufecturers
who need combine for the purpose of avoiding competi-
tion is comparatively small, and is favoured by proximity
of location. To take one trade as an example. It is
obviously impossible for all the cotton-spinners of the
world to agree with regard to the quantity of yarn which
they will produce and the prices which they will charge.
But it is much more feasible for the cotton-spinners of one
country to do so, especially when the exceptionally high
prices which they obtain in their home market enable them
to sell any surplus in outside markets without any profit,
or even at a loss. Protection, therefore, not only restricts
competition directly, but it also oflFers seductive facilities
and temptations for such combinations in further restriction
or abolition of competition as are known as combines,
pools, rings, trusts, and syndicates.
While protection thus enables local manufacturers to
combine, and to do so with such profit to themselves, that
it is worth their while to undertake the trouble, and even
risk, where such action has been made illegal, free trade
tends to prevent such combinations. In free-trade countries
prices are governed by international competition, and no
combination can raise local prices by more than a fraction
— equal to cost of freight — over those ruling in the world's
markets, unless it included all, or nearly all, the world's
producers.^ The advantages therefore, even where local
combinations are feasible, are too small to induce the
trouble and risk of forming them, unless they are favoured
^ ** In the great majority of cases there is only a very narrow margin between the
price at which English manufacturers can produce a commodity and the price at which
it can be produced abroad, so that a comparatively small rise in price will afford to the
foreign manu&cturer the coveted opportunity of acquiring a new market.*' — ^J. Stephen
Jeans, Trusts^ Pools, and Corners^ p. 30.
CH. V SPURIOUS CAPITAL AND INTEREST 105
by some other legal privilege. Hence the comparative
rarity of such industrial combinations in free-trade Great
Britain, and their prevalence in industrial countries which
have adopted a protective policy. Thus, once more
quoting from Mr. J. Stephen Jeans's valuable work.
Trusts^ Pools y and Corners : —
" The iron manufacturers of Germany regularly adopt
two sets of prices. The tariff, by protecting them from
outside competition, enables them to quote a high range of
prices — ^which are often regulated by combination — to
home consumers, while they dispose of a large surplus at a
lower range of prices in neutral markets, where they have
to face the competition of other countries." ^
Similarly, Professor Hadley states : ^ —
" Nearly every industry in the United States employing
fixed capital on a large scale has its pool, whether they call
it by that name or not."
Von Halle, in Trusts in the United States^ furnishes a
table comprising no less than 501 separate combinations,
rings, and trusts, embracing almost every product of in-
dustry, and states : —
"The Sugar Trust, it is alleged, arbitrarily dictates
prices on its purchases, and, with the aid of the tariff, sells
at prices which yield a greater profit to the refiner than
could be obtained under free competition. This was
admitted by Mr. Havemeyer (President of the Trust)
before the investigation committee of the United States
Senate, 15th June 1894."*
The same result has followed from the protective
tariffs of European countries. The Forum of May 1899
publishes an article, "Trusts in Europe," by Wilhelm
Bcrdrow, which states : " It is in Germany, however,
of all European countries, that trusts have spread most
extensively and have been most successful. . . . The
German and Austrian rolling-mill unions, the trusts of
the chemical industries, as well as the most important
French trusts — the latter embracing more particularly the
' p. 177.
2 **On Trusts in the United States, ** in Economic Journal^ March 1892, p. 73.
» P. 69.
io6 DEMOCRACY VERSUS SOCIALISM partii
iron, petroleum, and sugar industries — have all adopted
the method of selling conjointly by means of a central
bureau, in order to dictate prices and to deprive the
individual members of every vestige of independence. . . .
As far as England is concerned, it must be admitted^
notwithstanding her great industrial activity and her
competitive warfare not less pronounced than that of
other states, the trust system has as yet found but tardy
acceptance in that country. This is doubtless due in
some degree to the thorough application of the principles
of free trade ; for it is well known that the largest trusts
are powerless unless their interests are secured by a pro-
tective tariff excluding from the home market the products
of foreign countries."
Combinations have been so rarely successful in Great
Britain that, dealing with the recent amalgamation of the
sewing-cotton factories, the Economist of 4th December
1897, could say : —
" This IS the introduction of the American trust system
into Great Britain. . . . There is a certain consolation,
however, in the fact that in such a country as ours industrial
monopolies seldom attain anything like permanent success."
While protection alone is thus the fruitful parent of
one set of industrial monopolies, others owe their origin
to a combination of protection with the ownership of
mineral lands ; still others to a combination between the
owners of railways and mineral lands, or indirectly to the
existence of privately owned railways, canals, and mineral
lands alone.
As an example of the former, the anthracite coal pool
in the United States may be cited.^ Practically all the
anthracite coal mined in the United States comes from a
limited area of rich deposits in the state of Pennsylvania.
This area is intersected by canals and railways, owned by
three companies, which control about 90 per cent of the
output through the purchase of this proportion of the
coal-land. The duty on foreign anthracite coal is 67
^ See ** Anthracite Mine Labourers,'* by O. O. Virtue, in Bulletin of the Department
of L^AouTj U.S., Nov. 1897 ; and Jeans, TrustSj Pools, and Corners; and H. D. Lloyd^
ff^ealtA against Commonwealth,
cH.v SPURIOUS CAPITAL AND INTEREST 107
cents per ton, equal to about 30 per cent ad valorem.
Being thus secured against foreign competition, and hold-
ing their local competitors in the hollow of their hand,
through the ownership of all the routes of transportation,
the three railway and canal companies, as long as they are
united, dictate prices for the whole of the output and
wages for all who seek employment. Though quarrels
between them have been frequent, each being followed by
a reduction in the monopoly price of coal, they have only
been intervals in the general course of exploitation through
the combination of their interests.
A more remarkable case, as exhibiting the indirect
influence of the monopolising tendency of private owner-
ship of routes of transportation, is the rise and progress
of the small group of men, which, after monopolising the
kerosene oil trade of the United States, is now extending
its supremacy in so many directions as to foreshadow the
coming of an autocracy over the entire industry of that
country. This monopoly has been established, and is still
being maintained by secret, illegal, and immoral contracts
with the privately owned railways of the United States,
which not only give lower freights to these favourites than
to their competitors, but which in various other ways
utilise the control over these public highways for the
destruction of the business of the latter. The following
evidence, of which that furnished by Mr. Henry W. Lloyd
in his painstaking ^ov)fiyWealth against Commonwealth^ — the
statements of which are based entirely upon official evidence,
— is of special interest, will sustain this contention : —
" He (Mr. Rockefeller) was able to secure special rates
of transportation with the help of some bribed railroad
freight-agents." ^
" One witness declared that the trust received from the
railway companies fourth-class rates on quantities of oil in
less than car-load rates, whereas he had to pay first-class
rates ; and that he had practically been driven out of
business in localities covered by certain roads who thus
favoured the trust.'* ^
^ E. von Halle, Truttt m tkt United Start s, p. ii.
' J. S. Jeant, Trusti, Pods, and Conurs, p. 95.
io8 DEMOCRACY VERSUS SOCIALISM partii
"After taking 3700 pages of evidence and sitting
for months, the committee of 1879 of the New York
Legislature said in their report : * The history of this
Corporation (the Standard Oil Trust) is a unique illustra-
tion of the possible outgrowth of the present system of
railroad management in giving preferential rates, and also
showing the colossal proportions to which monopoly can
grow under the laws of this country. . . . The parties
whom they have driven to the wall have had ample capital
and equal ability in the prosecution of their business in all
things save their ability to acquire facilities for trans-
portation.'
" More than any others the wrongs of the oil industry
provoked the investigations by Congress from 1872 to
1887, and caused the establishment of the Interstate
Commerce Commission, and more than any others they
have claimed the attention of the new law and the new
court. The cases brought before it cover the oil business
on practically every road of any importance in the United
States — in New England, the Middle States, the west, the
south, the Pacific Coast ; on the great east and west trunk
roads — the Pennsylvania, the Erie, the Baltimore, and
Ohio, the New York Central, and all their allied lines;
on the transcontinental lines — the Union Pacific, the
Central Pacific, the Southern Pacific ; on the Steamship
and Railroad Association controlling the south and south-
west. They show that from ocean to ocean, and from
the Gulf of St. Lawrence to the Gulf of Mexico, wherever
the American citizen seeks an opening in this industry he
finds it, like the deer forests and grouse moors of the old
country, protected by gamekeepers against him and the
common herd.
" The terms in which the commission have described the
preference given the oil combination are not ambiguous :
* great diflference in rates,* * unjust discrimination,* * in-
tentional disregard of rights,* * unexcused,* * a vast dis-
crepancy,' * enormous,' * illegal,' * excessive,' * extraordinary,*
* forbidden by the Act to regulate commerce,' * so obvious
and palpable a discrimination that no discussion of it is
necessary,* * wholly indefensible,* * patent and provoking
CH. V SPURIOUS CAPITAL AND INTEREST 109
discriminations for which no rational excuse is suggested/
* obnoxious/ * disparity,' . . . * absurd and inexcusable,'
* gross disproportions and inequalities,' *long practised,'
*the most unjust and injurious discrimination . . . and
this discrimination inured mostly to the benefit of one
powerful combination.' " ^
The control exercised by a few millionaires over the
meat and cattle trade of the north-western States of the
Union originates in the same cause. E. von Halle
states : —
"The special investigation of the meat and cattle
trade" (United States Senate Report, No. 829, 51st
Congress, second session, ist May 1890) "demonstrates
that heavy pressure on the railroads and ownership of the
Chicago stockyards on the one hand, * friendly agreements '
on the other, had resulted in an effective control of the
whole market. . . . They fix the prices for the purchase
of cattle and sales of meat in the markets of Chicago,
Kansas City, and Omaha." *
This is confirmed by Henry D. Lloyd : —
" When a farmer sells a steer, a lamb, or a hog, and
the housekeeper buys a chop or roast, they enter a market
which for the whole continent, and for kinds of cattle and
meats, is controlled by the combination of packers at
Chicago known as * the Big Four.' This had its origin
in the * evening ' arrangement, made in 1873 ^7 ^^e rail-
roads with preferred shippers, on the ostensible ground
that these shippers could equalise or * even ' the cattle traffic
of the roads. They received $ 1 5 as * a commission ' on
every car-load of cattle shipped from the west to New
York, no matter by whom shipped, whether they shipped
it or had anything to do with it or not. The commission
was later reduced to $10. They soon became large
shippers of cattie ; and with these margins in their favour
* evening' was not a difficult business. By 1878 the
dressed beef business had become important. As the
Evener Combine had concentrated the cattle trade at
Chicago, the dressed-beef interest necessarily had its home
^ Henry D. Lloyd, fVea/tA against Commonwealth, pp. 476-478.
' E. von Halle, Trusts, pp. 2i, 22.
no DEMOCRACY VERSUS SOCIALISM partii
at the same place. It is a curious fact that the Evener
Combine ceased about the time the dressed-beef interest
began its phenomenal career. The committee appointed
by the United States Senate to investigate the condition
of the meat and cattle markets found that under the
influence of the combination the price of cattle had gone
down heavily. For instance, in January 1884 ^^ best
grade of beef cattle sold at Chicago for $7. 1 5 per hundred
pounds, and in January 1889 for $5.40; north-western
range and Texas cattle sold in January 1884 ^^ $5-6 o, and
in January 1889 at $3.75 ; Texas and Indian cattle sold in
1884 at S4.75, ^^^ price declining to $2.50 in December
1889. These are the highest Chicago prices for the
months named.
" * So far has the centralising process continued that
for all practical purposes,* the report says, *the market
of that city dominates absolutely the price of beef cattle
in the whole country. Kansas City, St. Louis, Omaha,
Cincinnati, and Pittsburg are subsidiary to the Chicago
market, and their prices are regulated and fixed by the
great market on the lake.'
"As to the effect on retailers, local butchers, and
consumers, it was admitted by the biggest of *the Big
Four,' * that they combined to fix the price of beef to the
purchaser and consumer, so as to keep up the cost in their
own interest.'
"The favouritism on the highways, in which this
power had its origin in 1873, ^^^ continued throughout
to be its mainstay. The railroads give rates to the
dressed-beef men which they refuse to shippers of cattle,
even though they ship by the train load — * an unjust and
indefensible discrimination by the railroads against the
shipper of live cattle.' The report says : * This is the
spirit and controlling idea of the great monopolies which
dominate the country ... no one factor has been more
potent and active in effecting an entire revolution in the
methods of marketing the meat supply of the United
States than the railway transportation.' " ^
Similar preferential treatment on the part of railway
^ Henry D. Lloyd, H^ealtk agabut CammonwtaltJ^ pp. 33-36.
J
CH. V SPURIOUS CAPITAL AND INTEREST 1 1 1
companies has been instrumental in creating many other
monopolies which apparently have no such causal connec-
tion with railway monopolies, notably that of some English
and American express companies.
Still another series of monopolies owes its origin and
existence to the ownership of patents and copyrights, as is
the case with the Western Union Telegraph Company, the
Bell Telephone Company, the School Book Trust, and
many others.
The manner in which the semblance of capital is given
to these monopoly rights is stated as follows : ^ —
" It is said to be customary for the preferred stock in all
American stock-companies to represent the money, value
of land, plant, materials, products, etc., whilst the common
stock at the beginning represents goodwill, rights, etc., to
which by and by accumulated profits add a more tangible
basis."
The magnitude of this process of converting monopoly
rights into spurious capital, generally known as " water-
ing stock," is illustrated by the same investigator as
follows : ^ —
"From 45.2 per cent in 1891, the actual value of the
property " (of the Cotton Oil Trust), " it rose to 48 per
cent in 1892, 50 per cent in 1893, 50.8 per cent of the
capitalisation in 1894. From this we may conclude that
. . . the actual value of the undertaking, minus the
goodwill, was not much more than from one-fourth to
one -fifth of the capital stock. This agrees with the
testimony of Mr. John Scott before the New York State
Committee in 1888."
The latest available balance-sheet of the " American
Tobacco Company," published in Bradstreets of 14th May
1898, exposes an even greater discrepancy between real
and spurious capital. This company, with the assistance
mainly of the tariff, but, to some slight extent, with the
help of some patents, controls the cigarette trade of the
United States, and is now underselling the makers of plug
tobacco with a view of forcing them into a combination
with itself. In the course of 1897 it lost $1,000,000
^ E. von HtUe, Trust l, p. 107. > Ibid, p. 106.
112 DEMOCRACY VERSUS SOCIALISM partii
in this endeavour. Nevertheless, the net profit on all its
transactions during this year was $4,179,460, on a capital
composed of $4,009,000, representing real estate, plant,
and machinery, and of $24,876,000, representing monopoly
rights, such as patents, trade-marks, and goodwll. There
is also a reserve fund, accumulated out of past profits not
divided, amounting to $10,900,000.*
^ While this book was twaiting publication, two articles, respectively entitled ** The
Rage for Trusts " and " The Trend of Trusts," appeared in The Public, a weekly journal
published in Chicago. They are from the pen of the editor of the journal, Mr. Louis
F. Post, an accomplished economist, and are so instructive that the present author
sought and received permission to republish them in combined form. They are re*
produced accordingly as Appendix VII.
CHAPTER VI
A COMPARISON OF REAL WITH SPURIOUS CAPITAL
The examinations conducted in the two preceding chapters
prove that industrial monopolies are not an inevitable out-
come of the private ownership and control of industrial
undertakings, as Socialism posits, but that they, in nearly all
instances, arise from special privileges granted by the State.
Therefore, no such far-reaching and disastrous remedy as
that which Socialism provides is required for their abolition.
Owing their existence to special privileges, the withdrawal
of these privileges will terminate their existence. They are
the creatures of the unjust interference of the State with
the equal rights of its citizens. Not further interference,
as Socialism demands, but the abolition of such interference
is, therefore, required to terminate their existence.
The further demonstration, furnished by the preceding
examination, is, that these monopoly-rights simulate the
appearance of capital, and that the tribute which they
exact largely simulates that of interest ; as also, that these
must be carefully distinguished from real capital and real
interest, if a true conception is to be formed of the
influence upon the distribution of wealth which the private
ownership of real capital and of unprivileged industrial
undertakings exercises.
This distinction between real and spurious capital,
between material products of human labour applied to
land, and the immaterial products of legal enactments,
must, however, be carried one step further.
All products of labour are destined to be consumed
either in the direct satisfaction of human desires, as wealth.
114 DEMOCRACY VERSUS SOCIALISM partii
or in their indirect satisfaction, as capital ; either in one
act, as food, or in a series of acts extending over shorter
or longer periods, as clothing, furniture, tools, machines,
buildings, and others. The object aimed at in the pro-
duction of all such things is the satisfaction of human
wants, and the only way to achieve this object is by their
destruction through consumption. Even if this object
fails to be achieved, these products of human labour
nevertheless disappear sooner or later. Either they are
lost, as in shipwrecks, or destroyed in accidents, as in
fires, or they gradually disappear under the influence of
mechanical decay and chemical disintegration.
The products of human labour which retain their
character of wealth for the longest period are gold, silver,
and precious stones. It may be that among the stores of
precious metals and jewels now existing, there is some
portion which has been of service to man from the very
dawn of history. Yet even these long-lived products of
labour differ only in degree and not in kind from all
other forms of real wealth. For even gold, silver, and
precious stones tend to disappear again as soon as they are
produced : jewels by being lost or spoiled ; precious metals
by being consumed in the arts, or through wear and tear
when passing from hand to hand as money, or when used
as ornaments, or through being lost.
All wealth and capital, therefore, being the product of
human labour, has, like man himself, a temporary exist-
ence only, and the stock of it, existing at any time, is far
smaller than is generally supposed. Were the continuous
processes of production to cease, even for one year, not
only would the vast majority of men die of starvation, but
there would be an unimaginable scarcity of all the more
permanent forms of wealth and capital as well. Mankind
lives mainly from hand to mouth. The wealth existing
at any time is mainly the product of the labour of a few
preceding years, and though some forms of wealth may
continue to exist for comparatively long periods, as some
buildings, statues, pictures, and others, not only are these
rare exceptions, but it is only through the constant appli-
cation of more labour that their life is thus prolonged.
CH. VI REAL AND SPURIOUS CAPITAL 1 1 5
Real capital, in common with all labour-products, is
subject to this consumption, decay, and destruction.
Legal enactments, however, are not subject to these
influences. Unless they are repealed by another act of
the Legislature they exist as long as the nation exists ; and
as long as they rem^n in force, every . monopoly-right
which they create continues to exist as well. There is
to-day in Great Britain scarcely any wealth, and certainly
no form of capital, which dates back to the Norman
G)nquest ; but the monopoly of the land of Great Britain,
then initiated, has continued to exist and has been extended
and intensified. Many secondary monopoly-rights also,
created centuries ago, continue to exist at the present
time, of which the New River Company, which levies
tribute upon a large section of the inhabitants of London,
is only a prominent example.
The creation of new monopoly-rights, to which nearly
all legislatures devote a considerable part of their time
and energies, is, therefore, not necessarily counteracted,
as is the case with real capital, by the disappearance
of older creations, and, therefore, their mass is steadily
increasing.
Moreover, social progress constantly tends to reduce
the value of real wealth and capital, while it similarly tends
to increase the value of all monopoly-rights. For social
progress, consisting of increase in population, advance in
the arts and sciences, lengthening of processes of pro-
duction and multiplication of exchanges, tends steadily to
facilitate and increase the production of all useful things,
and thus to reduce their value, while it frequently leads
also to the sudden destruction of value in forms of capital
which have been rendered obsolete by new inventions and
discoveries.
The same cause, however, tends to enormously increase
the value of land and other monopoly-rights. To revert
to previous examples, the land of England does not
materially differ in extent, and does not differ at all in
character, fi-om what it was at the time of the Conquest.
Yet the whole of its capital value at the former time
would be covered over and over again by the tribute
ii6 DEMOCRACY VERSUS SOCIAUSM partii
which Englishmen now pay for its use within a single
year. In the city of Adelaide a piece of land was
lately sold at a rate which, for lo-feet frontage, ex-
ceeded the price which the Government received some
half-century ago for the whole area of that city. The
same advance in value is conferred by the same cause
upon secondary monopolies. Depending, like land, for
their value upon the tribute which they can exact from
individual consumers of the goods and services to which
they relate, increase of population adds to the number of
tributaries which they can exploit, while all progress
tends to reduce the cost of producing the goods or
services which they render. Their annual net income,
and, therefore, their capital value, is thus constantly
enhanced by social progress.
The value of all real capital is thus constantly de-
clining, and all of it has only an ephemeral existence, dis-
appearing soon after labour has created it, and depending
upon further labour for its recreation. Monopoly-rights,
on the contrary, are constantly increasing in value and
number and have permanent existence. It follows that
what Socialism terms capital consists in every country to
by far its largest extent of mere monopoly-rights and to a
small extent only of real capital. This is true even of
Great Britain, where protective monopolies have been
abolished, and is still more true of countries like the
United States, Germany, and France, where their baneful
influence has been added to that of other and even more
far-reaching monopolies. It is, therefore, obvious that
the diagnosis of the social malady upon which the doctrines
of Socialism are founded is faulty in the highest degree,
and that, therefore, the remedy which it proposes cannot
be the true remedy. Making no distinction between real
and spurious capital, between what is permanent and
obviously unjust and injurious, and what is ephemeral and
has never been proved to be unjust or injurious, it con-
demns both alike. By combining, under one denomina-
tion, these two widely differing classes of property,
socialists obscure the action of both, and have, therefore,
been unable to see that the relations between labour and
cH.vi REAL AND SPURIOUS CAPITAL 117
the owners of real capital are profoundly affected by the
existence of these monopoly -rights. That the power
which the capitalist possesses over labour is not due
to his possession of real capital, but to the weakening
of the economic position of labour through the baneful
action of monopoly-rights, will be shown in subsequent
chapters.
CHAPTER VII
SURPLUS-VALUE
As shown in Part I. chapter i., one of the fundamental
theories of the economic teaching of Socialism is that of
surplus-value as set forth in Marx's Capital. Starting
from the conception that the value of any commodity is
determined by the average labour-time socially necessary
for its production — a conception which, as already stated,
is now repudiated by many Socialists themselves — he arrives
at the conclusion that the value of labour, i.e. wages, is
similarly determined by the necessary cost of maintenance
of the labourer and his family, i.e. the labour -time
necessary to produce his labour-power. On this founda-
tion — ^shown to be false in Part II. chapter i. — he erects
the theory of surplus-value. Shortly stated it runs :
The average labour-day (labour-power) is largely in ex-
cess of the time required by the labourer to produce the
equivalent of his maintenance (labour-value). The excess
of time spent in labouring produces a surplus-value which,
being appropriated by the employer, becomes ultimately
divisible into rent, interest, and profit. Supposing the
labour-day to number twelve (12) hours, and six hours to be
sufficient to produce the value required for the labourer's
maintenance or wages, it follows that the other six hours
are spent in labouring for the exclusive benefit of the
capitalist-employer. His gain, the surplus-value, therefore,
arises from the unpaid appropriation of a part of the labour-
time of every labourer, i.e. from that part of the value of
the product of individual labour which exceeds the cost of
the labourer's maintenance. Surplus-value, therefore, is a
CHAP. VII SURPLUS^VALUE 1 1 9
deduction from the product of individual labour, appro-
priated by the capitalist-employer.^
As Marx himself admits that the creation of surplus-
value, in his theory, is merely an extension beyond a
certsdn point of the production of value generally,^ the
demonstration, given in Part II. chapter i., of the errone-
ous nature of his theory of value destroys the basis on
which his conception of surplus-value rests. For if the
value of labour-power is not determined by the con-
sumption of the labourer and his family, and if the value
of goods is determined by other factors than the average
labour-time socially requisite to produce them, then the
difference between the value of labour-power and labour-
product does not necessarily arise from the unpaid appro-
priation by the employer of part of the labour-power.
The importance of the subject is, however, far too great
to allow it to rest at this point, and requires a complete
examination. In this and the following chapters, there-
fore, an endeavour will be made to show that this entire
conception of the origin of surplus -value is crude and
misleading, first by showing that the theory is contradicted
by facts, secondly, and at greater length, by a careful ex-
amination of the component parts of surplus-value.
If the Marxian conception of the origin and nature of
the tribute which is undoubtedly exacted from labour were
true, all surplus-value must be a deduction from the pro-
duct of individual labour. If it can be shown that there
are cases in which surplus-value arises which can be seen
by him who runs not to be deducted from the product of
such labour, the conception must be false. The following
examples furnish such instances : —
A jeweller employs five women in sorting and stringing
pearls. His capital is, say, ^150,000, and fis annual sales
of strings of pearls amount to ^100,000. His average
aimual dear profit is, say, ^8000. If this sum represents a
deduction from the produce of individual labour, it must
be deducted from the labour-product of the five women
whom the jeweller employs. Each of them must, there-
^ For quotations see Book I. chapter i.
« See quoUtion from Capital, pp. 176, 177, in Part I. chapter i. p. 5.
I20 DEMOCRACY VERSUS SOCIALISM partii
fore, be entided to an addition of ^1600 a year to the
wages which she is actually receiving.
If, to this reductio ad absurdum^ it is objected, that
the surplus-value of ^8000 may, as to its greater part, be
deducted from the product of the labour of the divers and
other labourers employed in harvesting the pearls from
the ocean-bed, and transporting them to the jeweller's
shop, the reply is obvious. These men were not employed
by the jeweller, but by preceding capitalists, who, accord-
ing to the supposition, themselves extracted surplus-value
from the labour of their workmen. The price which the
jeweller paid for the pearls included this surplus-value,
just as the price which his customers pay to him includes
any surplus -value he may receive. The surplus-value
which he exacts, therefore, is additional to that exacted by
previous employers, and, if it is a deduction from the
produce of individual labour, it can only be deducted from
that of the labour which he has employed, viz. five women.
Unless, therefore, it is contended that the labour-product
of each of these five women exceeds ^1600 a year, this
surplus-value must be admitted to be no deduction from
the produce of labour.
The following case is even more decisive. A vigneron
obtains from his vineyard new wine to the value of £1 00,
constituting the entire return of the year's harvest. He
keeps this wine for ten years, at the end of which period,
and without any labour having been done to it in the
interval, the wine possesses a value of ^^200. From whose
labour has this surplus-value of ^100 been deducted ?
The only labourers who could be victimised are those who
were employed in attendance on the vines, plucking grapes,
and making the wine. When their labour ceased, its
entire produce, inclusive of that of the vigneron* s own
labour, had a value of ^ 1 00 only. The additional ^^ 1 00
which makes its appearance subsequent to the cessation of
their labour, cannot be the product of the latter, and can-
not, therefore, be a deduction from the product of their
or any other man's labour.^
^ Both examplet are a free rendering of those given in Capital and Interest by von
Bbhm-Bawerk.
CHAP. VII SURPLUS-VALUE 1 2 1
These two examples will suffice to show the erroneous
nature of the Marxian theory of surplus-value on which
Socialism is based. A close examination of the phenomenon,
moreover, shows that surplus-value is a compound of
many elements, some of which are natural consequences of
the mental constitution of man and of his physical environ-
ment, and not in any sense deducted from the product
of individual labour ; while others, which constitute such
deductions, are the result of limitations placed on the equal
freedom of men by legislative enactments which confer
special privileges on some. Of these latter, monopoly-
tribute or spurious interest has already been dealt with in
so far as its origin is concerned. The next few chapters
will be devoted to the examination of other component
parts of surplus-value, and to that of the influence which
each of them exercises upon the earnings of labour.
CHAPTER VIII
LAND AND RENT
The term "land" possesses a double meaning. In its
narrower sense it applies to the superficial area of the dry
surface of the earth. In its wider sense it denotes all the
matter and energies of nature external to man and un-
altered by his activities, for the reason that man, being a
land animal, can utilise nature's powers only from the
dry surface of the globe. Air, rain, and sunshine, the
elements of fertility contained in the soil, and the mineral
treasures hidden below the soil ; the various manifestations
of motion and gravitation, heat and electricity, chemical
action and life, become accessible to man from this dry
surface alone ; and though man has made himself master
of the ocean and may soon obtain the mastery over the
aerial regions as well, yet from the dry surface of the
globe alone can he obtain the materials which enable him
to navigate these alien spaces, and to it must he return,
from time to time, in order to renew his power of navi-
gating them.
This dry, superficial area, therefore, is the medium
through which all nature becomes accessible to man, and
as far as his efforts to utilise nature for the satisfaction ot
his wants are concerned, all nature is included in it. In
its wider sense, therefore, the term land covers all the
powers of nature which man may use for the satisfaction
of his wants ; not merely that which gives him foothold
and resting-place, but all the matter which he can form
into wealth and all the energies which assist him in his
efforts. It is the only source of wealth ; the passive
CHAP. VIII LAND AND RENT 123
factor in its production, without the use of which no
wealth can be made and human beings cannot exist ; the
indispensable condition of life and of production.
The general condition through which any and all the
opportunities for making wealth, the treasures of nature,
become accessible to man, therefore, is through the use
of some part of the dry surface of the earth. There is,
however, another condition equally far-reaching in its
consequence.
All material existence, and, therefore, all economic
activity also is conditioned by space and time. Space and
time, however, are concepts, not of things, but of the
relation in which things stand to each other. Space is a
relation of extension, i.e. of the relative position of things
which exist simultaneously ; time is a relation of succession,
ue. of the relative position of things which follow upon
each other.
Space, therefore, which has relation to all matter, also
relates to wealth, which is matter modified by human
exertion, and to this exertion. Every exertion, every
form of production, requires space for its accomplishment ;
space to stand upon ; more space to move in, and still
more space for the extraction, storage, transformation, and
transportation of materials, implements, and products.
Occupations differ as to the space necessary for their most
efficient conduct, but in every occupation there is a limit
to the amount of exertion which, within a given space,
will yield the most profitable return. Hence, natural
law imposes upon man an extension of his labour in space,
and this extension is limited by the area of the dry surface
of the globe.
This dry surface, however, the land in the narrower
sense of the term, does not everywhere give access to
similar opportunities for making wealth. Land differs
greatly in the elements of fertility which the soil contains,
as well as in climatic conditions. Some areas give access
to mineral treasures, while others do not, and even the
former vary greatly with regard to the quantity and im-
portance of^ the mineral deposits underlying them. Some
areas, again, contain waterfalls and other opportunities
124 DEMOCRACY VERSUS SOCIALISM partii
which facilitate production ; other areas are covered with
much coveted timber or luscious grasses, while others,
again, are arid, bare, or covered with worthless scrub or
rock. The opportunities for making wealth, the gifts of
nature to which land gives access, thus vary in infinitesimal
gradation from what economically may be regarded as
zero, to what bears the utmost potentiality of wealth.
There are, however, still further variations in the pro-
ductivity of land, i.e. in the opportunity which it affords
to satisfy wants through exertion, which have frequently
been disregarded, though they are of equal importance
with those already enumerated. In previous chapters it
has been pointed out that exchange not only forms part
and parcel of the productive process, but is the necessary
condition for the existence of the world-wide co-operative
system of production which has raised mankind above the
level of savages. As co-operation through exchange
supersedes the primitive form of isolated production, the
qualities of land which offer facilities for exchanges
assume importance and gradually increase in importance.
Access to navigable streams, to harbours, lakes, and tide-
waters ; proximity to fertile lands, mines, natural routes
of trade, and centres of population ; proximity to artificial
routes of transportation, as roads, canals, and railways,
now confer potentialities of productiveness upon land
which it previously did not possess.
These variations bring into prominence a consideration
which otherwise would be of far less importance. As
between two pieces of land, that one is obviously more
productive which, to the same exertion, gives a greater
return. It may, however, be, and frequendy is the case,
that of two pieces of land of equal productivity when a
certain amount of exertion is applied to both alike, one
will be more productive than the other if the amoimt of
exertion is increased on both of them. To some extent
this is true even in agriculture. A sandy soil may give
the same or even a smaller return per unit of labour
in wheat -growing than an equal area of clayey soil.
But if both were used for fruit-growing, which requires
a considerably greater application of labour and
CHAP. VIII LAND AND RENT 125
capital per acre, the sandy soil might prove far more
productive.
This consideration applies with greater force to
mineral land. If no more exertion were applied to an
acre of mineral land than to one of wheat-land, the
return would probably be increased but little, if at all, and
might be even less. When, however, a vastly greater
amount of exertion in labour and capital is applied to the
mine, such land may not only give a greater aggregate
return, but may even give a much greater return per unit
of exertion applied.
The most important manifestation of this condition,
however, arises in our great exchanging centres — the manu-
facturing and trading cities. If no more labour were
expended on an acre of land in the heart of a great city
than on an acre of country land used for wheat-growing,
the return would scarcely be greater. When, however,
suitable and costly buildings are erected on the former,
when thousands of workers and large amounts of capital
are congregated within these buildings, then the produc-
tivity of such land is enormously greater than that of an
equal area of country land, not only in the aggregate, but
generally also per unit of exertion applied.
So far we have arrived at these conclusions. Land,
i.e. the dry surface of the globe, differs in its productivity,
i.e. in the opportunity which it affords for the satisfaction
of human wants through exertion : ( i ) inasmuch as some
land yields a greater return than other land to the same
exertion ; (2) inasmuch as some land yields a greater
net return than other land when more exertion is con-
centrated upon it.
Let us now consider the influence which these facts
exert upon the distribution of wealth.
Seeking to satisfy their wants with the least exertion,
all men will endeavour to obtain the use of such land as,
according to existing knowledge, will yield the greatest
return to their exertion. They cannot all be successful in
this endeavour, because the extent of the most productive
land is limited, and because, in every occupation, there is a
limit to the amount of exertion which can be applied most
126 DEMOCRACY VERSUS SOCIALISM partii
profitably within a given space. Some men, therefore,
must use land of less than the greatest productiveness,
other men must use still less productive land, until at last
a wide difference in productiveness prevails between the
most productive and the least productive land in use. So
far, however, as the knowledge of men enables them to
determine, the least productive land in use will still be
more productive than the most productive land not yet
used, for the reason, that all men seek to satisfy their
wants with the least exertion. The least productive land
in use, i.e. the land at the margin of production, must,
however, fix the standard of the reward for human exer-
tion, because it is a matter of indifference to any worker,
whether he receives all the product of his labour when
using land at the margin of production, or whether he
receives the same amount when working on land of greater
productiveness. If, for instance, the entire product of a
man's exertion at the margin is los. a week, then, other
things being equal, he will be willing to use the same
exertion on land yielding 50s. a week, provided he himself
receives no less than los. a week out of the same. The
difference is rent, a payment made for the use of better
natural opportunities than are available to all men.
Taking from those who use more productive land the
excess of its productiveness over that of land at the
margin, rent equalises the natural opportunities for making
wealth to all men.
On this consideration is based Ricardo's Law of Rent,
which runs : " The rent of land is determined by the
excess of its productivity over that which the same applica-
tion can secure from the least productive land in use."
In view of the considerations above advanced, it will be
seen that the law thus formulated expresses only part of
the truth. It excludes from consideration the advantages
which arise from the massing of more exertion on suitable
land. A true law of rent cannot be so limited, and the
importance of extending it may be seen from the errone-
ous deductions to which this limitation has given rise.
Ricardo, Mill, and their successors were in this way led to
adopt the Malthusian doctrine, that increase of population,
CHAP. VIII LAND AND RENT 127
compelling the use of inferior land, must reduce the
average productivity of labour, and therefore must tend
to produce misery and starvation. In the absence of any
notice of the facts referred to, this was not an unnatural
conclusion. When, however, these facts are included in
the survey, the opposite result will be seen to arise. For
with the increase of population there arises an increase in
secondary production and exchanges, and these multiply
at a greater ratio than population. Hence, more and
more workers can be concentrated on land of the highest
productivity, that which is most suitable for manufactures
and exchanges, and where the productivity of the average
unit of labour is greatest. Not only is the tendency of
resorting to inferior land thus checked, but as more
additional labour is employed on land of greatest pro-
ductivity than is employed on land of inferior productivity,
the aggregate product of all the labour is increased.
Instead of increase of population leading to misery and
starvation, it must, caeteris paribuSy tend to an increase of
comfort and plenty.
The distinction previously drawn is therefore of the
utmost importance, and this consideration may excuse this
digression from the strict line of argument. A law of
rent, to be strictly true, must therefore be formulated as
follows : —
The rent of any piece of land is determined by the
excess of its productivity over that of an equal area of the
least productive land in use, after the sum of exertions
which in both cases yield the most profitable result has
been deducted.
So far land and the rent of land has been dealt with
under natural conditions — that is, under conditions unin-
fluenced by men's temporary enactments ; and it will have
been seen that rent is a natural result of the extension of
men's labour in space, just as interest will be seen to be a
natural result of the extension of their labour in time.
But, just as when dealing with capital, attention had to be
drawn to a mass of spurious capital and spurious interest,
the result of mere legal enactments, so attention has now
to be drawn to a spurious and additional rent, equally
128 DEMOCRACY VERSUS SOCIALISM partii
resialting from mere legal enactment, i.e. from the private
ownership of land and rent.
In order to make this important point clear, use will
be made of the following diagram. Tiie horizontal lines
enclose land of the same productivity, while the per-
pendicular lines divide all the land into equal areas. The
assumption, not absolutely true, is that as productivity
declines area increases, but this assumption in no way
ialsifies the argument. The figures looo to loo mark
the original productivity of the land : —
Degrees of Productivitv
A
3
~
B
900
C
Soo
D
700
E
F
G
H
J
*i
CHAP. VIII LAND AND RENT 129
As long as social requirements can be satisfied through
the use or land A alone, there is no rent. As soon as
any portion of land B must be used, rent arises. All of
land A now acquires a rental value of 100 units, i.e. equal
to the excess of its productiveness over what is now the
marginal land B. When any of the land C has to be
taken into use, B, in its turn, acquires a rental value of
100 units, and the rental value of A is correspondingly
increased, viz. to 200 units. The use of any land of
lower scale of productiveness gives a rental value to the
land in the immediately superior scale, and correspondingly
increases the rent of all the land which previously had any
rental value. In contradistinction to this general rise of
rent, there stands the partial rise of rental value which arises
when additional productiveness is discovered in or con-
ferred upon particular land. The discovery of new
mineral deposits ; the discovery of new methods for in-
creasing the yield, or of treating more profitably, mineral
deposits previously known ; the discovery of methods, or
the invention of machines, which increase the yield of
special kinds of land or of their products ; changes in
trade routes ; the rise or increase of trading centres ; the
extension of railways and other routes of communication
and transportation, — all of these as well as other causes
increase the value of particular land. In these cases the
rental value of such land alone rises, without increasing
the rental value of other land. That is to say, where
rental value is conferred upon any land through a lower-
ing of the margin of production, all rents rise correspond-
ingly ; but where new rental value is caused by advantages
discovered in or conferred upon particular land, the rise in
rental value is confined to such land.
If it is now assumed that if all the land above line G
were fully used, the products of this land would suffice
for the requirements of the people, the natural rent would
be : For land A, 600 units ; for B, 500 units ; for C,
400 units ; for D, 300 units ; for E, 200 units ; for F,
I cx) units ; and land G, as well as all the land below it in
the scale of productivity, would possess no rental value.
If, however, the owners of the land keep any of the land
K
I30 DEMOCRACY VERSUS SOCIALISM part ii
above line G out of use, say the lots marked o, two
consequences follow.
The first is, that in order to satisfy the necessities of
the community, some labour must be employed on less
productive land, i.e. on land between G and H, and that,
as a consequence, the produce of the aggregate labour of
the community is lessened.
The second is, that out of this lower product of the
aggregate labour a largely increased rent-charge must be
paid. For some land of 300 units of productiveness
being now used, land above G, of 400 units of pro-
ductiveness, now acquires an annual rental value of 100
units, and the rental value of all the land of superior
productiveness is correspondingly increased. In the case
illustrated by the diagram the rent received by the owners,
if all the land above line G had been fully used, would
have been 1 1,100 units. By keeping out of use the three
squares marked o, they increase the actual rent-charge to
14,900 units. This increase, amounting to 3800 units, is
a spurious rent, as is also the increased rental value of the
land kept out of use.
Moreover, where all the land has passed into private
ownership, the self-interest of owners may, and frequently
does, induce them to hold so much superior land out of
use or full use, that some of the least productive land
must be used unless the population declines. As under
such conditions land is a complete monopoly, owners do
not, as a rule, permit the use of any, even of the most
inferior land, without some payment. As some men will
now be compelled to use such land in order to live, they
will be compelled to pay a rent for it. Natural rent is,
under these conditions, superseded by rack-rent, i.e. rent
at the margin : the least productive land available having
no other limit than the smallest reward which labour can
be compelled to accept, labour on all other land and in all
occupations must accept similarly depressed wages. The
rent for all other land, therefore, must rise accordingly,
and the body of spurious rent which the workers must
pay to the landowners is increased to enormous propor-
tions. All this artificial addition to the natural rent is a
CHAP. VIII LAND AND RENT 131
real deduction from the natural reward of individual
labour.
Nor is it necessary that much land should be kept out
of use in order to produce this result. All that need be
done is to devote some considerable areas to inferior uses
than those they are best fitted for. To do this may, and
frequently does, confer an additional advantage upon the
landowners at the expense of the whole community, and
still further emphasises the conflict between the interests
of the community and those of private landowners.
G>nditions, largely prevailing in the Australian colonies
as well as in other new countries, will serve to illustrate
this phase of the subject. In every one of these colonies
millions of acres of the richest agricultural land, with
ample rainfall and near to markets and ports of shipment,
are used for mere grazing purposes. As a consequence
most of the farmers were forced to settle on poorer land,
further from markets and ports, and where the rainfall is
less abundant. Land fit only for grazing is thus used for
agriculture, while the land fittest for agriculture is used
for grazing only. The latter would, under wheat, have
given a gross return of say 35s. per acre, while as grazing
land its gross return is only say 15 s. per acre. Yet the
net return to the owner may be, and frequently is, greater,
where the gross return is smaller. For the cost of culti-
vating the land, i.e. wages, seed, implements, horses, etc.,
may absorb 30s. out of the 35s., while in grazing, where
scarcely any labour is employed and all other expenses are
small, these would absorb less than 5s. per acre. In the
one case, therefore, the net profit would be 5 s. out of a
gross profit of 35 s. ; in the other it would be los. out of
a gross profit of 15s., and, in addition, the trouble of
management will be much smaller. The community,
however, loses 20s. per acre, the diflference in the gross
return. For in either case the profit of the community is
measured by the gross and not by the net return. The
gross return represents new labour-products added to the
common stock. Out of this new product the labourers
employed in producing the materials and implements used
on the land, as well as those directly employed on it,
132 DEMOCRACY VERSUS SOCIAUSM partii
defray their consumption. When the gross product is
35s., the added wealth is greater by 20s. than when it is
15s., and as long as the additional consumption does not
exceed the value of the additional wealth, the permanent
wellbeing of the community is increased to that extent.
Hence, though the owner gains 5s. by the substitution of
the less productive for the more productive process, the
community loses 20s. worth of wellbeing. In addition,
there is an enormous loss from the reduced productivity
of the labour of those farmers who are compelled to
cultivate land of less fertility and at greater distance from
markets and ports. An even more graphic illustration of
this condition is furnished by the wholesale clearances of
Scottish and Irish land in order to make room for cattle,
sheep, or deer, and the resulting misery of large numbers
of the evicted tenants, and of the shopkeepers who supplied
their wants.
Still another and far-reaching influence arises from
private ownership of land. It has been shown that the
natural function of rent is to equalise the natural oppor-
tunities available to men. Rent takes from those who
use the better natural opportunities the excess of produce
due to this advantage and reduces their earnings to that
which equal exertion would gain on the least productive
land in actual use. As no man can be entitled to the free
use of more productive natural opportunities than other
men can obtain, no man can be entitled to the surplus of
produce, due, not to his greater exertion, but to the use
of the more productive opportunity. Rent, i.e. natural
rent, therefore, is not a deduction from individual labour-
results, as many socialists assert. It is a deduction from
the results of the labour of society as a whole. Just as
no person is entitled to the free use of more productive
natural opportunities, so no person can ethically be com-
pelled to the uncompensated use of less productive oppor-
tunities. All men are entitled to the free use of average
opportunities to labour. Those* using opportunities more
productive than the average, therefore, are morally bound
to compensate those using opportunities of less pro-
ductiveness than the average. The equalising mission of
CHAP. VIII LAND AND RENT 133
rent, therefore, is not finished till it is either divided in
equal shares among all those who have contributed to the
result of the social labour, or till it is used for purposes
from which all of them derive equal benefit. Spurious
rent, on the other hand, is, as already stated, a deduction
from the result of the individual labour of every worker.
When, however, land is private property, not only
the spurious, but the natural rent as well, is appropriated
by a few, the owners of land. The equalising tendency
of rent still aflfects all workers, reducing their earnings to
what equal skill and exertion can produce, or is allowed
to retain, at the margin ; but on the owners of land it
has the opposite tendency. It concentrates into their
hands the rent produced by the aggregate labour of the
community, and adds this vast and ever-increasing sum to
any earnings which they may derive from their own
labour. Without having rendered and without rendering
any service in return, they thus become the recipients of
the social wealth represented by natural rent, and of the
deduction from individual wealth represented by spurious
rent. The equalising tendency of rent, therefore, stops
short at the land-owning classes ; below this line it reduces
individual wealth, above this line it increases individual
wealth. Instead of a tendency towards equalisation, there
is thus introduced a twofold tendency towards diflferentia-
tion, the results of which, supported by the secondary
monopolies previously described, may be seen in the
startling contrasts which disfigure our civilisation : on
the one hand, multi-millionaires, receiving an amount of
wealth vastly exceeding that which their labour contributes
to the conmion stock, and frequently contributing nothing
nor rendering any other service ; on the other hand, a
vast army of proletarians, who receive far less than their
labour contributes, divided by a middle class vainly
struggling to preserve its independence between these
opposing forces.
Private ownership of land, therefore, deprives all
workers of their equal share in the product of their
common labour, the natural rent of land ; it further
creates a spurious rent which is a real deduction from the
134 DEMOCRACY VERSUS SOCIALISM partii
product of individual labour, and it utterly nullifies the
economic and ethical function of natural rent. That
which under natural conditions would tend to produce a
homogeneous society, strong through the agreement
between public and private interests, then produces a
society constantly becoming more strictly divided into
two opposing classes, and threatened with destruction
through the conflict between public and private interests,
artificially introduced.
Secondary influences of private ownership of land and
of other monopolies on the relation between employers
and employed will be discussed in a subsequent chapter.
CHAPTER IX
THE THEORY OF INTEREST
As space is a relation of extension, so time is a relation
of succession. Every individual act follows upon or
precedes some other act. If the sequence of one act upon
another is immediate we speak of their succeeding each
other in a short time ; if the seque^yce is remote we speak
of long time. All production consists of a series of acts
following upon each other, and all production therefore
requires more or less time. The production of bread,
for instance, requires the successive accomplishments at
different intervals of sowing, reaping, grinding, and baking.
Similarly the production of a chair requires the felling of
a tree, cutting it into boards, planing them, cutting them
into the requisite pieces, turning some of these, fitting all
the pieces together, and finishing the rough chair. No
two of these acts can be performed simultaneously, they
all stand in the relation of sequence to each other, and the
series therefore requires considerable time in its accom-
plishment. In like manner every other productive process
requires more or less time. It follows that only those
productive processes which require little time for their
accomplishment can be directed to the satisfaction of
present wants, i.e. of wants existing at their initiation.
By far the greatest number of productive processes, all
those requiring more than a short time for their accom-
plishment, are necessarily directed to the satisfaction of
wants which are expected to arise in the future, i.e. after
the process is completed. Present wants, therefore, are
mosdy dependent for their satisfaction upon productive
136 DEMOCRACY VERSUS SOCIAUSM part 11
processes which were initiated in the more or less remote
past, and the fruits of which are now maturing or have
matured, while present labour is mostly directed to the
satisfaction of future wants through the production of
goods which will become available at such future date.
Every increase in the length of productive processes post-
pones the time when their fruits will be available for the
satisfaction of human wants, while, as has been already shown,
it increases the number of wants which can be satisfied.
All but the most primitive processes of production,
therefore, imply the capacity of men to anticipate future
wants and their desire to provide for them. The world-
wide, roundabout, or co-operative system of production
implies the possession of a high degree of these faculties.
These faculties are part of the imaginative process. In
order that men may be able to provide for future wants,
they must be able to form a mental picture of the state of
their future desires, of the quantity and kind of the goods
necessary to satisfy these desires, and of the time when
these desires will arise and these goods will become avail-
able, i.e. they must form some present conception of the
value of goods which will only become available at a given
future date. The only principle on which such goods
can be valued is that of their marginal utility under the
mutual action of our wants and the provision for these
wants as we anticipate them to be at some future date.
Apart from the element of risk, our present valuation of
future goods is, therefore, made on the same principle as
that of present goods, i.e. goods available at the present
time. As these two sets of goods, however, become
available at diflferent times, under diflferent circumstances,
and serve diflferent sets of wants, it is inevitable that a
diflferent valuation should be placed upon them at the
present time. With few and unimportant exceptions this
diflference shows itself in a higher present value being
placed on goods which are available at present than on
goods of like quantity and kind which only become
available at some future time. This diflference in value
is the cause of interest, which therefore arises from the
extension of man's labour in time.
CHAP. IX THE THEORY OF INTEREST 137
The following are the main reasons for the higher
value of present than of future like goods : —
All persons who expect or hope that they will be
better off in the future than in the present, that is the
vast majority of men, will naturally value a given quantity
of present goods more highly than an equal quantity of
like goods in the future. For while their present wants
are pressing upon their means to satisfy them they expect
a less pressure in the future. The case of musical students
who mortgage a great part of their future earnings in
order to obtain present tuition is an extreme case in
point.
On the other hand, persons who enjoy a good income
in the present, but who anticipate that it may fall off or
altogether cease in the future, such as employees with
fixed salaries which may cease, will value goods becoming
available at this future period more highly than goods
available at present. This feeling, however, exerts no
influence, because present goods can be preserved for use
at such future period, especially in the shape of money,
and can thus be used either for the satisfaction of present
or of such future wants ; whereas goods which do not
become available till such future time cannot be used
for the satisfaction of present wants. Hence, even in
these cases, present goods are valued more highly or,
at least, as highly as future goods of like quantity and
kind.
This difference in provision for wants between present
and future is sufficient to give a higher subjective, and
therefore a higher objective, value to present than to
future goods. This tendency is, however, increased by
other causes.
The first of these is a tendency towards the under-
valuation of future wants inherent in all men. That
which lies nearest looms largest. Future wants are under-
estimated because they are distant and in the measure of
their distance, and, therefore, the goods which can satisfy
none but such future wants are undervalued. This
underestimation of future wants differs in different men.
Savages and children scarcely take any thought of distant
138 DEMOCRACY VERSUS SOCIALISM partii
wants, and among adult civilised men wide differences
also appear. Nearly all men, however, give way to it to
some extent.
This second cause is cumulative with the first. Not
only the persons who expect to be better off in the future
than they are in the present, but all, or nearly all, other
men make this underestimate of their future wants, and
hence the lower valuations placed on future than on present
goods is made more intensive and more extensive.
A third and independent cause for the same phenomenon
arises from the technical superiority of present over future
goods, i.e. from the fact that, as a rule, goods which are
available now give, when used as instruments for the
production of other goods, a greater return than goods
which become available in the future for such use.
As already explained, lengthier methods of production
are, on the whole, more productive than shorter methods.
Given the same quantity of productive instruments and
labour, the lengthier the method of production in which
they are employed the greater will be the quantity or
the better the quality of the resulting product.
Suppose now that we have available in the year 1898
a quantity of productive instruments equivalent to one
month's labour. We can employ this one month's labour
in methods of production which will give an inmiediate
return, or in such as will give a more or less remote future
return through the application of more labour, — with
this difference, however, that as we chose a lengthier
method, so the future product of this month's labour,
as well as that of every other month's labour successively
employed in this particular process, will be increased.
Let it be supposed that its product in immediate pro-
duction wiU be 100 units of wealth ; in a one year's
process 200 units; in a two years' process 280; in a
three years* process 350 ; in a four years' process 400 ; in
a five years' process 440 ; in a six years' process 470 ; and
in a seven years' process 490. Any other figures will do
as well, as long as the principle is observed that longer
processes give greater return, but that the return increases
at a less ratio than the length of process.
CHAP. IX THE THEORY OF INTEREST
139
The following table will show when these units of
wealth, the product of one month's labour, will become
available : —
Length of Process.
Units of Product.
Time of Availability.
Immediate
One year .
Two years
Three years
Four years
Five years
Six years .
Seven years
100
200
280
350
400
440
470
490
1898
1899
1900
I90I
1902
1903
1904
1905
Suppose now, that in addition to the production-goods
equivalent to one month's labour, which are available
tch-day, we expect an equal quantity of such goods to
become available in each of the years 1899, 1900, and
1 90 1, let us see what will be the relative result at any
future time of these four separate months of labour when
employed in production : —
One Month's Labour of the Year
Yield in units of
1898.
1899.
1900.
1901.
product for the year :
1898
100
• • •
• • •
• . .
1899
200
100
• • •
• . «
1900
280
200
100
• . .
1901
350
280
200
100
1902
400
350
280
200
1903
440
400
350
280
1904
470
440
400
350
1905
490
470
440
400
The above table clearly shows that present production-
goods yield at any given time a greater return than goods
of like quantity and kind which become available at a
later period.
HO DEMOCRACY VERSUS SOCIALISM partii
It is also obvious that the possibility of engaging in
lengthier and, therefore, more profitable processes of pro-
duction arises from the present possession of consumption-
goods. If these were not available in sufficient quantities,
labour and capital would be compelled to engage in shorter
processes, giving forth their products at earlier periods,,
though in smaller quantities compared with the exertion
employed. The increased result of the lengthier processes,
therefore, is in this measure due to the possession of con-
sumption-goods available in the present, not because they
are capital, but because they enable capital to be used in
processes of greater utility. Therefore, present consump-
tion-goods possess the same technical superiority over
future consumption -goods which present production-
goods possess over future production-goods.
The three causes enumerated for the higher value of
goods available in the present than of goods which will
become available at any future time, are : —
(i) The difference in the circumstances of provision
for wants between present and future.
(2) The underestimate of future wants and of the
importance of future goods.
(3) The greater productiveness of lengthier methods of
production and consequent technical superiority of present
goods.
While the two first causes are cumulative, the third
cause acts independently and largely alternatively. To
show this in detail here would lead too far ; suffice it to
say, that this alternative action gives to the phenomenon
of higher valuation of present goods a varying intensity
but universal validity. The varying intensity of subjective
valuations enables exchanges of present against future goods
to take place. Those who place a relatively high value
on future goods are buyers of future goods, i.e. lenders ;
those who place a relatively low value on future goods are
sellers of such goods, i.e. borrowers. A market price,
resulting from their higgling, once established, exerts a
reflex action on all subjective valuations, so that even
those few who, from their economic circumstances, would
value future goods equally with present goods are influ-
CHAP. IX THE THEORY OF INTEREST 141
enced by the general position of the market, which assures
them also a preference for present goods. The same
levelling tendencies of the market bring the lower value
of future goods into a regular proportion with their
remoteness in time, establishing everywhere a rate of
interest which is the general measure for the difference
between the value of present goods and that of goods
which become available at any future time.
Of the three causes, the combined action of which
gives rise to interest, one only, the technical superiority of
present goods, is invariable in its action. Of the others,
the underestimation of future wants declines in intensity
and extensity as men become better adapted to the condi-
tions of social life. The third cause, difference in the
provision for wants between present and future, also will
be less active when a just system of distributing wealth is
adopted. For, in such case, the present needs of all will
be more easily met, while a great majority will be able
and desirous to retire from productive labour at a com-
paratively early age. Present needs will, therefore, be
less pressing and future needs more pressing, leading to a
reduction, from both sides, of the difference of valuation
of present and future goods.
The causes which have resulted in a decline of the
rate of interest in the past, will therefore continue and
may be reinforced in the future, leading to a further,
permanent, and large decline of the rate of interest. That
interest ever will or can disappear entirely, however, does
not seem probable, in view of the persistence of the
technical superiority of present goods, and of the im-
probability of the entire disappearance of the two other
causes which gave It existence.
In a former chapter ^ it has been shown that the value
of productive instruments is determined by the marginal
utility (value) of the sum of the consumption-goods which
form their ultimate product. This ultimate product,
however, is not contemporaneous with the productive
instruments ; it appears as these disappear in it. Com-
pared with the productive instruments which give it being,
1 Part II. chap. ii.
142 DEMOCRACY VERSUS SOCIALISM partii
the final product is a group of future commodities ; of
goods which will become available in the future. The
present value of this finaJ product, i.e. its value measured
in present goods, is therefore lower than its future value,
and therefore the value of the productive instruments is
also lower than the future value of the consumption-
goods into which they become embodied. It is equal to the
present, and not to the future, value of these future goods.
The capitalist, therefore, buys productive instruments
at the present value of the sum of their ultimate products,
and waiting till these latter have arrived at maturity, till
what is now the future has in its turn become the present,
becomes possessed of their higher value. This increment
in value is the interest which he receives.
To illustrate this sequence of events, take the case of
a capitalist who purchases productive instruments, material,
tools, and labour ; and in order to simplify the illustration,
let us assume that he purchases them all at one and the
same time, i.e. at the beginning of the productive process.
The circumstance that this is not quite true does not
affect the principle but only the amount of interest which
he will receive. Let it be further assumed, that the sum
of the final products of these productive instruments has
a total value, when they are available, of 500 units ; and,
further, that of these total ultimate products, equal parts
become available at the end of each of five successive years,
and possess at that time a value of 100 units, so that at
the end of five years the whole product has been realised
and the productive instruments have disappeared.
All these products are future goods at the time the
capitalist purchases his productive instnmients. Their
present value, therefore, i.e. their value measured in
present consumption-goods, is less than that which they
will possess when they in their turn will be available for
the satisfaction of human wants, when they will have
become present consumption-goods. That part of the
total product which will become available at the end of
one year, and which then will have a value of 100 units,
possesses now a value of say 95 units only ; the second
part available at the end of two years has a present value
CHAP. IX THE THEORY OF INTEREST 143
of 90 units ; the third year's product equals 85 units ;
the fourth year's product equals 80 units ; and the fifth
year's product equals 75 units. The total present value
of these consumption-goods, the future product of the
group of productive instruments in question, and having
a value of 500 units when they become available, is 425
units only. Therefore, the value of these productive
instruments is 425 units, equal to the present value of
their ultimate product. Our capitalist purchases them at
this price, and the interest which he receives arises from
the fact that he has purchased with a smaller quantity of
mature goods, possessing a present high value, a larger
quantity of immature goods, possessing a present low
value, and that he waits until this latter in its turn has
ripened into high value.
This interest, therefore, is not taken from any one.
It arises, as has here been proved, when the capitalist pays
full value for all the productive instruments, labour in-
cluded, i.e. when he pays a price for them equal to the
value of the sum of their products. It had no existence
before ; it came into existence in the hands of the capi-
talist, because he is a capitalist, i.e. because he, possessing
more goods at present available for the satisfaction of
himian desires than he himself needs, exchanges them for
goods which, in their turn, will be able to satisfy human
wants at some future time. As, in the continuous process
of production, those future goods gradually approach use-
fulness, and the more pressing, because more proximate,
human wants, their value increases, until at last this utility
and value reach their highest point, that of goods which
can satisfy the most urgent wants, i.e. wants actually
existing. Interest, therefore, is not, as Socialism posits, a
robbery of labour, but an increment of value which arises
from the natural extension of human labour in time and
separately from the exertion of labour.
That interest cannot be regarded as part of the product
of labour, and that, therefore, it is not a deduction from
the legitimate wages of labour, i.e. the full product of the
labourer's exertions, will, however, be demonstrated still
more fully in the next chapter.
CHAPTER X
THE WAGES OF LABOUR
The foregoing examinations have paved the way for the
inquiry, what part of the product of the industry of society
rightfully belongs to those who take part in its production,
i.e. to the producers of wealth of every kind, as producers.
Obviously, the most that each producer can obtain indi-
vidually is the entire product of his labour, and, as will be
shown in subsequent chapters, this is also the least that
justice demands for him. The only question which
concerns us here is what constitutes the produce of indi-
vidual labour.
Man as such, whether isolated or in co-operation with
others, produces nothing. All wealth is the joint product
of labour and land. As already demonstrated, the exten-
sion of man's labour in space, which natural conditions
impose upon him, and the variations in the productivity
of land, produce the widest divergence between the natural
conditions under which labour is exercised. Inevitably,
the opportunity which some use is better or worse than
that which others can use, and ultimately the differences
become of enormous importance.
As a consequence, the same unit of skill and exertion
will produce many times the amount of wealth from one
piece of land than when put forth upon some other piece
of land. The excess is not due to any labour ; it arises
from the greater bounty of nature. To whom then does
it belong? To the man who by accident labours upon
the more productive land? Or to the owner who, by
purchase, inheritance, or fraud, got hold of it ? Or does
CHAP. X THE WAGES OF LABOUR 145
it not rather belong to the society, the whole body of men,
as a common fund to provide for their common needs ?
Nature owes to all men an opportunity to maintain their
lives by labour. But no man can possess a natural right
to the use of a better natural opportunity than others can
obtsun. Hence, that part of wealth which arises from the
use of a better natural opportunity than the least pro-
ductive which must be used, i.e. the natural rent of land,
must be deducted from the reward of individual labour, as
being, ethically and economically, no part of the product
of such labour, and must be put into a common fund, of
which every member of society is entitled to an equal
^bare.
In natural rent, therefore, we found one deduction
which must be made from what might, superficially, be
regarded as the product of individual labour. Just as this
d^uction becomes necessary owing to the extension of
man's labour in space, so another deduction must be made
on account of the extension of his labour in time. As
was shown in the last chapter, interest, that is natural
interest, arises from the greater value possessed by goods
available in the present, than that possessed by an equal
quantity of the same kind of goods which only become
available in the future. It remains to apply this condition
to the wages of labour, separately from that already made
with regard to all productive instruments. Suppose a
ploughman has given a week's labour in ploughing a field,
which eight months hence will yield 800 bushels of wheat.
Suppose, likewise, that this one week's labour is exactly
one-hundredth part of all the labour required to produce
the wheat at the flour-mill, where it is worth 4s. per bushel.
The ultimate value of the product of the ploughman's
labour in that case is 800 x 4s. = 3200s. divided by 100
= 32s. To this value he is manifestly entitled at the
time when the wheat, the produce of the joint-labour of
himself and others, is available, i.e, at the end of eight
months. If there were no employer, he could not justly
receive more than this amount, nor could he receive it earlier.
But can he be entitled to this amount at the end of the
week, when his labour ceased ^ Obviously not, for the
146 DEMOCRACY VERSUS SOCIAUSM part ii
product of his labour and that of others, the 800 bushels
of wheat, had a smaller value at the end of the week's
ploughing than eight months afterwards, when it became
available, and his share, therefore, also had a smaller value
at the earlier time. Hence, though the ploughman is
entitled to a wage of 32s. at the end of eight months, he
cannot be entitled to 32s. now, as, in that case, he would
receive more than the present value of what his labour
produces. If he will wait till the product of his labour is
matured, he is entitled to its then full value ; if he wants
to reap now the reward of his labour, when its product is
as yet immature, he cannot be entitled to more than its
present value.
If, instead of working for wages, the ploughman is an
independent farmer, he cannot obtain the product of his
labour at the end of the week's ploughing, but is com-
pelled to wait for it for eight months, till the harvest
is gathered. The ploughman cannot be entitled to
better conditions and a greater return to his labour,
because he works for an employer, than he could obtain
if he were working on his own account imder exactly like
circumstances.
Suppose, then, that the general valuation of the com-
munity places 3000s. available now at exactly the same
value as 3200s. available eight months hence. In that case
the value of the harvest was 3000s. at the time when the
ploughing was ended, and as this ploughing constitutes
one-hundredth part of all the labour which produced the
harvest, the ploughman would be entitled to the one-
hundredth part of 3000S., i.e. he would be entitled to
30s., that being the then value of the ultimate product
of his labour. The difference between 30s. and 32s. —
between the present and the ultimate value of the product
of the ploughman's labour — obviously belongs to him who
purchases this inmiature product of labour with mature
products, i.e. the employer who pays wages.
The importance of the subject under discussion may
justify, even at the risk of tediousness, the use of a further
illustration which applies the same considerations to
manufactures in a more detailed manner. Taken from
CHAP. X THE WAGES OF LABOUR 147
BOhm-Bawerk*s Capital and Inter est^ it has been largely
modified.
Suppose an engine to be constructed from the ore
upwards by one workman, working continuously for five
years, and that, when completed, the engine possesses a
value of ^550. Let it also be assumed that the labour of
each year produces a result exactly equal to a fifth part
of the engine. Nevertheless, the workman could not be
entitled to one-fifth part of the value of the completed
engine, jf 1 10, at the end of the first year, for the reason,
that an engine ready for use now has a greater value than
one exactly similar, but which will not be ready for use till
four years hence. If it is assumed that the general pre-
ference for goods available now, over similar goods available
at some future time, is equal to 5 per cent per annum,^ the
workman is entitled at the end of each year to no more
than £ 1 00. The proof of this statement is found in the
fact, that when paid at this rate, the workman receives in
the course of five years exactly the same value as if he
waited for payment till his engine was completed.
For between the end of his first year's labour and the
date of completion of the engine, there intervenes a period
of four years ; between the end of the second year's labour
and completion the interval is three years ; between that
of the third year's labour and completion it is two years ;
and for the fourth year's labour it is one year ; while the
end of the last year's labour and the date of completion of
the engine coincide. At the assumed rate of preference,
^ 1 00 received by the workman at the end of the first year,
therefore, exceeds the value of ^100 to be received by
him at the end of the fifth year by 4 x ^5 =^£20, and a
corresponding excess of value adheres to each of the sums
of ^100 which he receives at the end of the intervening
years. Paid ^100 at the end of each year, the value of
all five payments at the date of completion of the engine
would be £sS^y ^'^* exactly the same amount which he
would have received if he had waited till the engine was
completed and its full value belonged to him ; as
under : —
^ For the take of limplicity compound interest hu been eliminated.
148 DEMOCRACY VERSUS SOCIALISM partii
iCioo at 5 %
for
4 years
= ^120
100
» 5 %
»
3 ,»
= 115
lOO
...5%
w
2 „
= no
lOO
"S%
»
I „
= 105
lOO
at com
pie
tion
= 100
Total
/550
It is clear, therefore, that the same increment which
the workman would receive from the growth of the engine
towards completion, he will also receive when he is paid
^100 at the end of each year, through the excess of value
which four of these sums possess at the time of payment
over four-fifths of the then value of the future engine. If
at the end of each year he were to receive jf no, the fifth
part of the value of the completed engine, he would receive
more than the value of the completed engine by ^55, as
under : —
£1 10 at 5 % for 4 years
"0 »» 5% »» 3 ,.
no „ 5% „ 2 „
no „ 5% „ I „
^£^3^
= 126
10
= 121
= 115
10
1 10 on completion
Total
= no
;C60S
If it is objected that the workman probably lacks the
means which would enable him to invest these several sums
so as to reap the interest, and that he wants annual pay-
ments so as to be able to live, the answer is : —
The needs of the workman for present sustenance do
not lead him to place a lower than the general valuation
upon present as compared with future goods. He, like
every one else, values present goods at a higher rate than
future goods. A sum of ^100 now is, therefore, in his
own estimation, as well as in every one else's estimation,
worth ^120 as compared with a sum of ^100 four years
hence. In receiving ^100 now, he, therefore, receives a
value of ^20 more than if he waited for four years, whether
he invests that sum or not.
Moreover, the fact that he wants ^100 for present
CHAP. X THE WAGES OF LABOUR
149
consumption, while his labour has not yet produced a
consumable equivalent, cannot entitle him to receive, and
cannot oblige any one to pay him, more than the total
value of the engine when completed. Yet, as has been
shown, were the employer or other purchaser of the engine
to give more than ^100 at the end of each year, he would
pay, and the workman would receive, more for the engine
than the one would have to pay and the other would receive
if payment were deferred till the date of completion. As
no one can claim that more than the full value of the
engine shall be paid when the payment is deferred, it
cannot be claimed that more than its full value shall be
paid when the payment is made in instalments.
Suppose now that, if instead of one workman working
for five years, five workmen, each working for one year by
himself, were employed successively in the production of
this engine, and that each of them produces exactly one-
fifth part of the engine. In that case an injustice would
be "done to the first and second labourer, and an undue
preference would be shown to the fourth and fifth labourer,
if the value of the engine were divided equally amongst
them at the end of the fifth year, each receiving ;^iio.
For the former would have completed their task four and
three years respectively before they received payment,
while the last worker received his immediately on com-
pletion of his work. A fair division of the product ot
their joint labour must take this diflFerence of time into
account. At the assumed rate of preference the division,
therefore, ought to be : —
First labourer
• • •
^120
Second
»»
• • *
"5
Third
»'
• •
no
Fourth
»»
• •
105
Fifth
>»
. .
Total
100
£sso
On the other hand, it is impossible for each of these
labourers to get ^ 1 1 o immediately his task is done. For,
as has already been shown, the total payment made for the
I50 DEMOCRACY VERSUS SOCIALISM parth
engine would in that case be ^605, or ^55 more than its
assumed value.
Let us, however, introduce a capitalist who will pay
for the engine in yearly instalments, and who is anxious
to pay its full value and to treat all the workmen equally.
Seeing that a just scale of division between the workmen,
in his absence, will yield to the last workman jf 100 on
completion of his share of the work, the capitalist will
treat him with absolute fairness by paying him this amount.
Inasmuch, however, as the other workmen have contributed
no more skill and exertion to the completed engine than
this one, they cannot be entitled to a larger payment for
the result of their labour on the completion of their task
than the last workman is entitled to on the completion of
his task. Therefore, each of the other workmen is also
entitled to no more and no less than ^100 at the end of
his task. In this way not only equality of .treatment for
each, but absolute fairness to all is preserved. For
inasmuch as the several payments are made at different
periods before the completion of the engine, each payment
of ^100 stands in a different relation of value to that of
the completed engine, and represents, at the completion
of the engine, the same value which would have accrued to
each workman from a just division if no employer had
interfered ; as under. Beginning this time with the last
labourer, we find : —
Labourer 5= jf 100 . . . =jfioo
= 105
= no
= "5
„ 4= 100 at 5 % for I year
„ 3= 100 „ 5 / „ 2 yean
/o »> 3 >»
I = 100 „ 5 % „ 4
>» * — *^*^ »> 3/0 » T »
= 120
Total £sso
The capitalist, by paying to each labourer jf 100, there-
fore, takes nothing from any one of them to which he is
entitled. What the former gains is the increment in value
which accrues to the engine in its growth towards maturity,
and which would have been gained by some only of the
labourers, not as labourers, but as capitalists, had they
been capitalists as well. The capitalist is entitled to this
CHAP. X THE WAGES OF LABOUR 151
increment because he exchanges goods of present utility for
something which will acquire utility at some future date.
This function of the employer — the fact that, apart
from organising and directing labour, he is a lender ; that,
as such, he purchases from the labourers employed by him
as well as from those who produced the implements and
materials used by the former, a greater quantity of goods
of present low value with a smaller quantity of goods of
present high value — is generally overlooked. Yet it is this
function which entitles him to receive interest. With
goods capable of satisfying present wants, he purchases
goods which can only satisfy future wants, through the ap-
plication of more labour. He waits till the product of labour
ripens into full value, and in the meantime gives to labour,
under natural conditions, the full present value of its pro-
duct, in goods which have already ripened into usefulness.
As labour in the present cannot be entitled to more than
the present value of its product — to more than it can
obtain in the absence of any employer — natural interest
is no deduction from the legitimate wages of labour, be-
cause it forms no part of the product of labour.
What, then, are the factors which, under the existing
co-operative system of production, regulate the individual
wages of labour under these just conditions, when, monopolies
being abolished, natural rent goes to the community, and
natural interest to the owner of capital. In Part II.
chapter iii. it has been shown that lengthier processes ot
production yield increased returns. Against this ad-
vantage must be placed the disadvantage of increased
interest-charge. The advantage may be equal or greater
than the disadvantage, but it is reasonable to suppose that
if it were less, the lengthier process would not be adopted.
Take now a tradesman who is in a position either to enter
upon a four years' process by himself or on a two years'
process if he engages another workman to assist him.
Let the product of their joint labour possess a value of
j^4i6 at the end of the two years' process, or equal to an
average wage of 40s. per man and week, while that avail-
able at the end of the four years' process by one man is
j^520, or an average of 50s. per week. If the employer
152 DEMOCRACY VERSUS SOCIALISM partii
now pay to the workmen, on the termination of the two
years' process, one - half of the product of their joint
labour, each of these two workers will receive ^f 208.
If, however, this tradesman works by himself in a four
years' process, he will, at its termination, become possessed
of ^520, which divided by two would be equal to ^260
at the end of a two years', process. For each of these two
periods of two years the employer would thus receive ^52
more than if he had engaged an assistant and had paid
him the fuU product of his labour. It, therefore, would
be more to his advantage to work by himself on the
longer process, and this, therefore, he would undoubtedly
do, unless some worker were willing to accept as much
less than the full product of his labour as would yield the
same advantage to the employer.
This example shows that, even under absolutely just
and natural conditions, employers can secure for them-
selves not only interest, but also all the advantages which
result from the extension of processes. The power to do
the latter, however, does not, under such natural condi-
tions, come to the employer as an employer, but as a
workman, for, as will have been seen, it arises from his
ability to employ all his capital by his own labour. The
capitalist-employer cannot so employ his capital. In the
absence of monopolies he cannot obtain any income from
the bulk of his capital unless it is employed productively
by other men's labour. This fact profoimdiy influences
the relation between capitalist-employers and labour under
natural conditions. For under such natural conditions,
land being free, large numbers of labourers could employ
themselves if the conditions of capitalist-employment did
not suit them. They, therefore, would not agree to enter
the service of an employer unless they could earn at least
as much as if they employed themselves.
Suppose, then, that a good proportion of workmen
possess sufficient means to employ their own labour in a
two years' process, yielding at the end of that period an
average return of 40s. a week ; that more labourers
possess enough for one year's process, yielding on its com-
pletion 25s. a week ; while the remaining workers can only
CHAP. X THE WAGES OF LABOUR 153
employ themselves in shorter processes, yielding say 12 s. 6d.
a week, or cannot employ themselves at all. Suppose also
that capitalist processes vary in length, but average six
years, yielding an ultimate product averaging 55 s. per
week and workman. What would be the rate of wages
under these conditions ?
The employers, unable to obtain sufficient labour
otherwise, would be compelled to induce some of those
who can independently earn an ultimate wage of 40s. per
week to enter their employment. These men, however,
could not be induced to do so, unless at least the equi-
valent of that amount were assured to them. The lowest
rate which they could be induced to accept would, there-
fore, be, say 38 s. 6d., payable at the end of each week,
this being equal to 40s. a week payable at the end of two
years. This is the minimum which they will accept. In-
asmuch, however, as all other workmen, who are earning
less than these, are also required by the employers, all
these would and could insist upon receiving the same rate
of wages, and this rate, therefore, would be the minimum
rate for all workmen.
On the other hand, the maximum rate which employers
could pay would be 48s. 6d. payable weekly, as, this being
the equivalent of an average of 55s. per week available at
the end of six years, they would otherwise pay more for
labour-products than their value at the end of each week.
Hence the average wages of labour under these conditions
could not fall below 38 s. 6d. per week, and could not rise
above 48s. 6d. per week. Within these limits they would
be determined by the pressure of the stronger party, and
that party is labour. For labourers could employ them-
selves, while capitalists cannot themselves employ their
capital. If no agreement were arrived at, labourers could
earn an independent income, but capitalists could obtain
no income from their capital. Hence wages must rise
to the maximum 48s. 6d., and every extension of pro-
cesses, every invention and every discovery, would enable
labour to enforce a further increase in its wages, absorbing
all the advantages of industrial progress and of a declining
rate of interest.
154 DEMOCRACY VERSUS SOCIALISM partii
What has here been demonstrated is : —
1. That natural rent and natural interest are not de-
ductions from the produce of individual labour or from
the wages due to the individual labourer.
2. That under natural conditions, i.e. when State-
created monopolies are abolished, every labourer would be
assured of receiving from the capitalist-employer, as his
wages, the full product of his individual labour, and that,
in addition, he would possess an equal share with all others
in the produce of the common labour, the natural rent of
land.
When, however, the natural conditions, here pre-
supposed, are superseded by artificial conditions based on
private ownership of land, the position of labour is pro-
foundly altered.
The warping of the moral sense of the community
and the obscuration of true economic principles which arise
from the existence and toleration of the all-pervading
monopoly in land, give origin to other and secondary
monopolies. Some of these are merely land-monopolies
in disguise, such as franchises which allow the exclusive or
privileged use of city streets for industrial purposes, or
which give exclusive rights-of-way, as in railways. Others,
like protective monopolies and the resulting rings and
trusts, are not connected directly with land-monopoly, but
could never have been established if the economic know-
ledge of the people had not been obscured by its existence.
Many secondary monopolies, therefore, are part and parcel
of the monopoly of land, and all others are indirectly
promoted by it. Every monopoly exacts tribute from
the workers of the community in the shape of spurious
rent or spurious interest, which they pay either in their
capacity of producers or in that of consumers, or in both
these capacities.
Before entering upon the detailed demonstration of
the evil consequences of monopolies, it may not be
useless to point out, that it is a matter of indifference to
labourers in which of these ways their wages are curtailed.
Whether money-wages fall from 40s. to 30s. a week, i.e.
25 per cent, or whether the price of all the things which
CHAP. X THE WAGES OF LABOUR 155
the labourers buy with their wages experience an average
rise to the same extent, has exactly the same consequences
for them. Similarly, a fall in prices has the same influence
on their wellbeing as an equivalent rise in wages. For
the real wages of labour do not consist of the stamped and
lettered pieces of metal or paper which the labourer receives
at the end of a week, a fortnight, or a month. They
consist of the sum of goods and services which his wages
can procure for him. Real wages, therefore, increase, and
increase largely without any rise in money-wages, if prices
fall ; and, similarly, real wages fall, without any reduction
of money-wages, if prices rise. All monopoly- prices,
therefore, involve a real reduction of wages.
Similarly, the social possession of natural rent may
enormously benefit the workers, apart from any consequent
rise of wages, if its use for social purposes relieves them
of existing taxation on the goods which they buy, and
brings within their reach satisfactions which they do not
now enjoy.
In Fart II. chapter viii. it has been shown that private
ownership of land affects labour directly in three ways : —
1. By absorbing their equal share in the social wealth
represented by natural rent, and thus compelling taxation
which directly reduces wages by increasing the prices of
the necessaries and comforts of life.
2. That, by lowering the margin of production, it
lowers the aggregate labour-result of the community.
3. That this artificial lowering of the margin of pro-
duction produces a spurious rent, which constitutes a
direct deduction from the wages of individual labour.
Far-reaching as these direct influences of land-monopoly
are, they are rivalled in importance by its indirect influ-
ence. Under natural conditions, when the land is not
monopolised, labourers can employ themselves. As has
already been shown, the advantage in bargaining with the
capitalist-employer then rests with the labourers.
The importance of this factor is fully illustrated in
new countries. In such countries capital is scarce, trans-
port difficult, and owing to scarcity of population, the
division of labour incomplete. The produce of labour.
156 DEMOCRACY VERSUS SOCIAUSM part 11
therefore, is on the average far less per labourer in new
countries than in older countries. Nevertheless the wages
of labour are on an average higher, and generally much
higher. The reason is, that the low price of land and
the easy conditions on which it can be obtained, enable so
large a proportion of the existing labour -force to dis-
pense with employers and to produce on their own
account, that capitalist-employers must bid high for labour.
Where, however, all the land, or all the more produc-
tive land, has passed into private ownership, there may be
any amount of unused or only partly used land, yet labour
cannot obtain any of it except on conditions with which
but few labourers can comply. Hence their power of
employing themselves is gone, they are placed at the
mercy of employers, and must accept lower wages than
they otherwise would consent to. Not only the landlord
is now cutting into the legitimate wages of labour, not
only is interest unnecessarily high, but the privileged
employer also is able to appropriate part of the legiti-
mate wages of labour. The latter now frequently gets
more than legitimate interest. Apart from any legal
monopoly which he may possess, and in addition to the
legitimate wages of superintendence, he now frequently
obtains a further increment.
This increment, which we may term profit, is itself of
a composite nature. It consists partly of exceptionally high
wages of superintendence, arising from partial monopoly
of the opportunities for acquiring the necessary qualifica-
tions ; partly of the advantages which arise from discoveries
and inventions equally applicable to all land ; partly of
the advantages which arise from the fact, that rent, advan-
cing through competition, frequently lags behind the pro-
gress in arts and sciences when the latter is continuous.
Where this is the case, some of the advantages even of
discoveries and inventions which are applicable to particular
land alone and which have been generally adopted, remain
for a time with the undertakers. All these would go to
labour were labour independent ; they go to the em-
ploying capitalist when the labourer's independence has
been destroyed.
CHAP. X THE WAGES OF LABOUR 157
Other monopolies, exercising their wage - lowering
influence upon labour directly in its capacity of consumer,
do so indirectly in labour's capacity of producer as well.
They enable the owners of the monopolies to raise the
price of the goods which they sell or of the services which
they render, over and above what these prices would be
under competitive conditions. The workers, paying these
higher prices, thus lose part of their wages. A given
amount of money-wages now buys less of services and
goods. But inasmuch as the vast majority of purchasers
(consumers) are workers for wages, this reduction in the
purchasing power of wages involves a large reduction in
production as well. Goods which cannot be consumed,
will not, in the long run, be produced. Therefore employ-
ment is largely curtailed, the already one-sided competition
of labourers for employment is increased, labour is placed
at a further disadvantage with regard to employers, and
a further fall in the rate of wages must ensue as an
indirect consequence of the rise in prices which monopoly
enforces.
Thus, whether labour is deprived of its natural wages
by a lowering of money-wages through the influence of
land-monopoly, or whether the deduction arises from an
increase of prices through the action of other monopolies,
the result is the same. In either case the vast majority
of the people are compelled to consume less than they
produce, and, unless an equivalent increase of consumption
takes place amongst the appropriating classes, an army of
unemployed men, an increase of the competition between
labourers for permission to work, a still further fall in
wages, and a general lowering of the condition of the
masses of the people is the inevitable result.
The counteracting tendency above alluded to, the
equivalent increase in the consumption of the rich, how-
ever, fails to arise. Primarily, the wealth which any man
obtains consists in goods, the produce of labour. This
holds good of millionaires and proletarians alike. The
tribute which a monopolist exacts from labour consists of
goods made by these labourers and of nothing else. If
the owners of these tribute-rights were willing and able
158 DEMOCRACY VERSUS SOCIAUSM partii
themselves to consume the goods which they take from
labourers, the evils of monopoly would be much reduced.
It would still involve the injustice that the makers of
wealth are deprived of a large part of this wealth, but the
consequences of this injustice would be far less disastrous.
Unfortunately, however, the monopoly-owners will or can
consume these goods only to a limited extent. The less
wealthy among them want to become more wealthy, and
the wealthier ones are animated by the same impulse,
though they cannot possibly consume the whole of their
incomes. Both these sections, therefore, save a consider-
able part of their incomes, i.e. of the goods which they
claim from labour. There are, however, only two ways
in which wealth can be saved to a large extent and for
any length of time. One is, by the multiplication ot
factories, railways, steamships, and other forms of pro-
duction-goods. Much of the wealth so saved is wasted,
but the larger part of it is usefully employed in extending
the roundabout process of production and consequently
increasing the product of labour. But this increase in the
product of labour is not accompanied by an adequate
increase in the consumptive power of labour, i.e. the wages
of the additional labourers employed still fall short, and
far short, of the value of the additional goods produced,
and, hence, there is an increase in the under-consumption
previously existing.
The only other way in which wealth can be saved to
its owners is through the creation of new monopolies or
the extension of existing ones. Here there is either no
additional production — as when rent rises through lower-
ing the margin of production — or a comparatively small
increase only. But there arises from this process a further
contraction of the consumptive power of labour. For
every such creation or extension of monopoly increases
the tribute which labour must pay to its owners, and,
therefore, reduces the wealth which it otherwise could
retain for its own consumption. Hence there must arise,
here also, an increase in the previously existing under-
consumption of goods.
It foUows that periods must arise, from time to time.
CHAP. X THE WAGES OF LABOUR 159
when a further saving of goods becomes impossible, i.e.
when no additional capital can, for the time being, be
employed profitably in industry, and when, for the time
being, no more monopolies can be created. What becomes
then of the vast amount of goods which the appropriators
will neither consume themselves nor permit labour to con-
sume ? They cannot be destroyed or in any other way
got rid of at once. Therefore their existence clogs the
wheels of industry ; further production must be curtailed
till they are consumed gradually. This is what is called
a commercial crisis : factories and workshops close ;
labourers must starve or live upon the scanty doles of
charity ; traders and manufacturers must go through the
Bankruptcy Court, until the gradual diminution of this
accumulation of goods once more allows the wheels of
industry to revolve and labour to be employed.
It is not here asserted that this under-consumption is
the only possible reason for commercial and industrial
crises. There have been crises which owed their origin
to the fact that more capital than could be spared for the
purpose had been invested in processes of long duration, to
the neglect of the more immediate wants of the community.
But such crises have been rare. The vast majority of
these disturbances are due to the cause here described, and
they are becoming more and more frequent. Nor can it
be otherwise. Every such crisis, in weeding out weaker
competitors, favours the concentration of wealth in fewer
and ever fewer hands. Every such increase of concen-
tration adds to the amount of wealth that will be saved
unnecessarily, by reducing the draft upon this wealth
through the consumption of its possessors and their con-
tribution to the revenue of the State, and must consequently
hasten the advent of the next crisis.
These convulsions, however, merely mark the culmina-
tion of forces constantly at work, just as earthquakes or
volcanic eruptions are the result of seismic forces constantly
active. For even during the interval between two crises,
even during those periods of feverish industrial activity
which now and then arise, much capital and many labourers
remain unemployed. The tendency towards under-con-
i6o DEMOCRACY VERSUS SOCIALISM partii
sumption once established, imposes caution upon the
employers of labour. Only the more active and reliable
labourers are employed at any time, and every crisis adds
to the number of those no longer in the race. Simul-
taneously a number of workers are employed for part of
the working time only, and the increasing difficulty of
finding profitable investment for savings adds to the
number of both classes even in times of comparative
prosperity.
This, then, is the sequence of events. The creation of
legal monopoly-rights concentrates wealth in the hands of a
comparatively small class through the tribute which these
rights enable them to impose upon the wealth-makers ;
the consequent reduction in the consumptive power of the
majority of the people is not compensated for by either
the consumption or the savings of the appropriating classes ;
hence arises under-consumption, scarcity of employment,
the rise of an ever-increasing unemployed class, and those
recurring industrial convulsions which we term commercial
crises. To the creation of legal privileges, especially to
the privilege of private ownership of the only source of
wealth, the land upon and from which all men must live,
must, therefore, be traced the industrial and social injustice
which disfigures our civilisation, and not, as Socialism posits,
to the private ownership of real capital and the private
conduct of non-privileged industries.
CHAPTER XI
THE COMPONENT PARTS OF SURPLUS-VALUE
The foregoing examinations prove, that surplus-value is
not a homogeneous body, as Socialism posits, but a com-
pound of several elements, differing widely in character,
viz. : —
Natural Renty the result of the extension of labour in
space.
Natural Interest^ the result of the extension of labour
in time.
Spurious Rent J arising from the creation by the State of
private ownership in land.
Spurious Interest^ arising from the creation by the State
of other monopoly-rights.
Profit, a secondary result, arising from the creation by
the State of land and other monopolies.
In their origin, these five integral parts of surplus-
value fall thus into two categories, viz. those arising from
natural law, and those arising from the corporate action
of human society. In their influence upon society and
the distribution of wealth, however, they fall into three
classes, viz. : —
Natural Rent, as being no part of the product of
individual labour, and, therefore, forming no deduction
from individual wages, but being part of the common
labour and wages of the whole community.
Natural Interest, as being no part of either individual
labour or of that of the community as a whole, but a
natural increment which the capitalist acquires only in so
far as he renders services by exchanging goods of present
M
1 62 DEMOCRACY VERSUS SOCIALISM partii
high utility for goods which will acquire such utility at a
future date.
Spurious Rent, Spurious Interest, and Profit, being part
of the product of individual labour and deducted from
the wages of labour without any service being rendered in
return.
Arising from natural law, natural rent and natural
mterest never can become the property of individual
labourers as labourers. Natural rent must always go to
the owner of land, and natural interest to the owners of
capital. No action which human societies may take can
alter the immutable laws of nature. All that human
enactments can do, is to change the ownership of land
and capital, so that rent and interest may be reaped by
the new owner or owners. When, therefore. Socialists
demand the abolition of rent and interest, they demand an
impossibility. The adoption of their industrial programme
to its fullest extent, the ownership of all land and capital
and the conduct of all industrial operations by the State,
would utterly fail to abolish rent and interest ; all it could
do would be to change the incidence of ownership in rent
and interest.
The rent of all agricultural and mineral land, as well as
that of factory sites, would pass into the hands of the State
by virtue of their being used as well as owned by the State ;
but unless the State continued to charge rent for the more
desirable residential areas, such rent would still be received
by those private persons who were permitted to use them,
in the advantage which they would enjoy over others.
Interest would similarly continue to arise, and if the
State did not itself absorb it in some way for the equal
benefit of all — ^which will be shown to be impossible — it
would pass into the hands of some of the people only, those
engaged in the primary stages of every productive process.
Moreover, while the latter method would eventually result
in a reduction of the wealth which could be distributed to
and consumed by the mass of the people, the former, the
charging of interest by the State, even if it could be done,
would not necessarily lead to any increase of wealth avail-
able for the consumption of the whole people. For with
CH. XI COMPONENTS OF SURPLUS-VALUE 163
growth of population arises the necessity for a continuous
increase in the amount of capital. This increase is at
present provided mainly out of that part of the annual
product of industry which constitutes surplus-value. If
the State becomes the only capitalist, the annual increase
of capital will have to be provided for out of the annual
product of industry just the same, and may, not unlikely,
be equal to the sum of natural interest now going to the
owners of private capital. Even, therefore, if the total
product of the national industry were not diminished by
the substitution of State officials for private organisers of
industry, the deduction of new capitd from this product
would leave no more, or little more, available for general
consumption in the most favourable but impossible case,
the reaping of interest by the State. When, however, the
State leaves interest in the hands of some of the people,
and at the same time prevents them from using it as
capital, which under Socialism is the only alternative, the
deduction of a further amount from the product of industry
for providing the necessary new capital must by so much
reduce the amount of wealth available for distribution and
consumption, and must, therefore, largely reduce the well-
being of all labourers engaged in the final processes of
production.
It has been shown that the landowner, receiving rent
for the use of opportunities which are available without
his existence, and to the creation of which he has either not
contributed at all or only as much, when a labourer, as
every other labourer, has not rendered and does not
render any service for the wealth which he is allowed to
appropriate. On the other hand, it has been made equally
clear that the capitalist, as capitalist, and apart from any
services which he may render in the actual organisation of
industry, receives natural interest for services which he
renders, and which are of the utmost importance. In
subsequent chapters it will be shown that such service
cannot be rendered by State officials with similar efficiency,
if at all. Apart from this question, however, seeing that
such services are rendered, the enjoyment of the reward by
those who render them fundamentally differentiates natural
1 64 DEMOCRACY VERSUS SOCIALISM partii
interest from natural rent. The possession of the latter
by private persons, its withdrawal from the common posses-
sion of the social body as a whole, constitutes a series of
ever-recurring and increasing acts of injustice to the mass
of the people. The enjoyment of natural interest by
private persons withdraws it from no one who has any title
to it, and therefore inflicts no injustice.
Moreover, while it has been shown that the private
possession of capital and interest inflicts no injury on the
social body, it has been equally shown that the private
ownership of land and the private possession of rent, as
well as that of other monopoly rights and tributes, does
inflict such further injury by the augmentation of surplus-
value through deductions from the wages of individual
labourers, viz. Spurious Rent, Spurious Interest, and Profit.
All these have been shown to arise, not from private
ownership of capital and the private conduct of non-
privileged industries, but from the creation by the State
of private ownership in land and other monopoly-rights ;
and, further, it has been shown that, while rent increases
with the progress of society, the rate of interest declines as
social conditions are improved.
For all these reasons a sharp distinction must be drawn
between these two kinds of property, their social influence
and ethical validity. While private property in one is
wholly justified, not injurious, and may be of incalculable
value to the weUbeing of society, private property in the
other is wholly unjustifiable, injurious in itself, and pro-
ductive of vast secondary injuries. On economic grounds,
those mainly considered in the foregoing examinations,
therefore, the appropriation by the State of rent — which,
as wiU be shown, carries with it the abolition of private
ownership of land, but not that of its private possession
and use — and of those industries which cannot be carried
on by private persons without the grant of special privi-
leges by the State, as well as the abolition of all other
monopoly-rights, is urgently called for by the vital in-
terests of society ; while, on the same ground, the appro-
priation of capital and interest by the State, and the State
conduct of non-privileged industries, is wholly indefensible.
cH.xi COMPONENTS OF SURPLUS-VALUE 165
That ethical considerations lead to the same conclusions
will be more fully shown in the succeeding division of this
work, Part III.
The economic conceptions, which serve as the scientific
basis for the industrial proposals of Socialism, are, therefore,
shown to be unscientific and untenable. Distinctions
which are of vital importance are disregarded ; accidental
similarities are mistaken for proof of congruity ; things
essentially difi!^erent are treated as of the same kind, and, as
a consequence, the cause of existing economic evils is sought
for in a false direction. The defects from which these con-
ceptions suflPer and which invalidate them are : —
1. Drawing no distinction between real capital, the
produce of labour from land, and mere monopoly-rights,
the creation of legislative enactments.
2. Regarding surplus-value as a homogeneous mass,
consisting wholly of tribute levied from the product of
labour.
3. Regarding productive labour as the only title to
the possession of wealth, thus disregarding the fact that
the voluntary transfer of wealth by its producer for service
rendered gives a valid title to him who has rendered the
service.
4. Regarding all capital as the result of theft, and
attributing the power to exploit labour to the private pos-
session of capital.
5. Regarding the present pathological condition of
competition as its physiological condition, a conception the
erroneous nature of which will be further demonstrated in
the next chapter.
CHAPTER XII
COMPETITION
In former chapters it has been shown that the socialist
contention of the failure of competition, the assertion that
the inherent tendency of free industry is towards the dis-
placement of competition by monopoly in so far as
employers are concerned, is a delusion. It has been
proved that nearly every kind of monopoly can be traced
to some form of legal restriction, to legislative interference
with the eaual rights of all men, by the creation of special
privileges for some, i.e. to legal limitations of competition.
There remains, however, the further contention, that
industrial competition, jua competition, is the cause of the
exploitation and degradation of the labouring masses, a
contention which challenges an inquiry into the nature and
function of competition. No such inquiry has ever been
instituted by socialists, who content themselves with assert-
ing the inherent wickedness of the competitive process.
Yet such an inquiry alone can determine whether the evils
which to-day result from competition are due to competi-
tion as such, and are ineradicable, or whether they result
from some interference with competition, and can be
eradicated by the removal of such interference.
That competition is not an arbitrary human invention,
but an inherent necessity of life, is shown by the fact that
it secures the maintenance and evolution of life throughout
all nature. The welfare of any organism depends upon a
due proportion between its several structures and their
respective functions, and this due proportion is secured by
the competition of the several structures for nutriment.
CHAP. XII COMPETITION 167
Every structure receives a supply of blood in proportion
to its activities. If the performance of function is defec-
tive, the supply of blood which it receives falls off and the
structure deteriorates ; if the performance of function in-
creases, the supply of blood increases and the structure
develops. This competition of the several parts of an
organism for nutrition, therefore, secures that balance
between the relative powers of all its structures on which
depends the efficiency of the entire organism, as well as
that constant adjustment of structures — some dwindling,
others growing — by which the organism adjusts itself to
changes of conditions.
This principle of self-adjustment through competition
within each individual is paralleled by the principle which
enables a species as a whole to adjust itself to the condi-
tions under which the life of its members must be carried
on. For this adjustment likewise depends upon each
individual being supplied with food according to the
activities which it puts forth. Only if the individuals
whose structures and consequent activities are best fitted
to surrounding conditions receive larger benefits, and those
less fitted receive smaller benefits or sufl?er greater evils,
can there arise the survival of the ofl?spring of the best
fitted, inheriting these parental traits by which the ultimate
adjustment of the whole species is secured. This adjust-
ment, therefore, depends upon a competition of individual
with individual, similar to the competition of structure
with structure within each individual, by which reward is
proportional to merit, leading to the ultimate extinction of
those least able to compete.
Likewise the evolution of lower types into higher
types is made possible only by due apportionment of
reward to merit through competition. Variations of
structures can become fixed only when they are service-
able, i.e. if they secure to their possessors a better chance
of obtaining food or safety, and, consequently, of leaving
ofl&pring similarly varying from the original type. For
the better nutrition, prolonged life, and greater power of
propagation which come to the members of the more
highly evolved species, lead to the displacement of
1 68 DEMOCRACY VERSUS SOCIALISM partii
similar species the structures and consequent faculties of
which are less adapted to their needs. Once more, there-
fore, competition, securing due reward to merit, subserves
the purpose of life, by causing the development and
securing the persistence of attributes, physical, mental,
and moral, which distinguish higher types from lower
types.
Throughout the industrial part of human society,
competition achieves a kindred apportionment of reward
to merit, securing kindred results. A vital difference,
however, must be pointed out. While merit in sub-
human species consists mainly of self-subserving activities
in the relation of unmated adults with each other, merit
in the industrial relations of men in the social state consists
solely in other-subserving activities. For the essence of
the social state is that voluntary co - operation which
results from the exchange of service for service ; and the
meritoriousness of any industrial act, therefore, is measured
by the amount of service which it affords to others.
Merit consisting in service, the reward of merit in the
social state, must, therefore, be proportioned to service
rendered. That any industrial agency — industry, trade,
or profession — flourishes or decays under the stress of
competition according to the degree in which it supplies
felt wants, i.e. renders services, needs no proof. What
needs to be proved here, because generally overlooked by
socialists, is, that under the stress of competition every
industrial agency is impelled to put forth the greatest
activity, i.e. render the greatest service in return for the
reward which it receives ; as also, that within each of these
agencies competition impels every individual to do the
same, and allots to each of them a reward equal to the
services which he renders.
Two kinds of industrial competition are conceivable.
One is that in which the number of prizes is smaller than
the number of competitors, and where, therefore, some com-
petitors cannot obtain any prize. In the other, the number
of prizes is equal to the number of competitors, but the
prizes vary in value, and competition, therefore, merely
determines the value of the prize which shall fall to each
CHAP. XII COMPETITION 169
competitor. Both these forms of competition are in
existence.
Architectural competition furnishes an example of the
first kind. A public building is to be erected and a prize
is offered for the best plan. One architect only can gain
the prize, yet nothing but good results from this, the
most onerous kind of competition; for not only are all
the competitors stimulated to the exertion of their artistic
faculties, but the object for which the competition is
instituted, the best plan, cannot be attained with similar
certainty by any other method.
The second kind of competition, that in which com-
petition merely decides the value of the prize which shall
go to every one of the competitors, and in which no single
competitor need go without a prize, while obviously less
onerous, is of far greater importance. In order to fully
and clearly elucidate the principles which determine this
form of competition under natural conditions, it is
advisable to study its action as it operates on various
classes.
Every medical man is constantly competing with other
medical men as to which of them shall gain the con-
fidence of the greatest nimiber of patients. He to whom
the greatest number give their confidence will be able to
charge the highest fees and to coUect the most remunera-
tive practice. But the fact that the services of one
surgeon or physician are valued by the public at ^ i o,ocx)
a year, does not prevent other surgeons or physicians
from earning an income. The income of every medical
man is determined by the competition of doctors for
patients and patients for doctors, and is exactly equal to
the value which the public places upon the service which
each of them can render.
The community, however, wants the services of a
limited number of doctors only, and nobody can tell what
this nimiber is. When disease is rife more doctors are
wanted than at times when the state of public health is
normal. Some doctors, therefore, may earn a decent
income sometimes, while at other times they wiU fail to
do so, and these will be precisely those doctors on whose
I70 DEMOCRACY VERSUS SOCIALISM partii
services the public places the least value. If there are,
however, more medical men than the public wants at any
time, those whose services are regarded as least valuable
never can make an adequate income as medical men.
These, therefore, will be compelled, sooner or later, to
devote their faculties to the rendering of some other
service which the community requires, and for which these
fit them better than for the practice of medicine.
What is true of medical men is equally true of all
professions in the absence of monopoly. In the long-run
every professional man will be paid in accordance with the
value which the community places on his services ; those
whose services are regarded as least valuable and are in
excess of public requirements will have to leave the
profession in which their services are not required, and
will enter on some occupation in which they are useful ;
the community is assured of always receiving the best pro-
fessional service which can be rendered ; and the mechanism
which assures these beneficial results — results which could
not be obtained in any other way — is competition.
If it be now objected that the judgment of the com-
munity is not always right, that among Qie professional men
whose services are accepted there may be some less fit than
some of those whose services are rejected, the objection
must be admitted to be true. That a human agency is
not perfect, however, will not cause it to be rejected by
reasonable men, unless a more perfect agency is av^able.
Which is the agency more perfect as a selector than the
estimate of the whole community ? If it is replied that
this more perfect agency is a governmental body, socialistic
or otherwise, the obvious answer is, that the units com-
posing this body must themselves be selected by the
community ; that if the judgment of the community is
unreliable when each man deals with what directly
concerns his own welfare, it must be infinitely more
unreliable when each man deals with what only indirectly
affects his own welfare, i.e. when all join in the selection
of the men who are to select all the professional and other
men who shall supply public wants. Competition, there-
fore, while not infallible, is yet far less fallible than any
CHAP. XII COMPETITION 171
socialistic substitute in the selection of the fittest men for
the services expected of them.
The principles set out above also guide the competition
of other classes. Take that of manufacturers, and as an
example that of manufacturers of boots. The one who
produces the best boots at the lowest price, i.e. who
renders his services against the smallest sacrifice on the
part of the community, will, in the long-run, have the
largest output, and will earn the biggest income. Un-
fortunately for the community, however, he cannot supply
all the boots required. Therefore other and inferior
manufacturers must be employed. These will earn in-
comes less than that which falls to the best manufacturer,
but which in every case correspond to the value which the
public places upon their services. If, however, there are
more boot -manufacturers than the community requires,
some must go without incomes, or must devote themselves
to some other occupation in which their services are
required. The men so weeded out wiU in the long-run
be the least capable manufacturers of boots. Here again
it is competition which secures to the community the best
service, and which transfers to useful occupations those men
who otherwise would lead lives useless to the community.
These considerations obviously apply with equal force
to all manufacturers, merchants, shopkeepers, farmers, and
other employers of labour. They, however, are no less
applicable to their employees, workers for salaries or
wages. As an example, boot-operatives may be selected.
The community wants each year a certain but varying
quantity of boots. Therefore a certain number of
employers set up boot-factories and want a certain number
of operatives to assist them in making boots. They offer
a certain wage to attract these operatives. Three cases
are possible under natural conditions. If the wages
offered are lower than those ruling in other industries
requiring similar skill, the number of operatives attracted
to the boot-factories will certainly be insufficient to supply
all the boots required. If equal wages are offered, the
number may still fall short of requirements. Higher
wages will attract a sufficient number.
172 DEMOCRACY VERSUS SOCIALISM partii
As long as the number of operatives is less than, or
just equal to, the requirements of the market, there will
be produced less than a sufficient or just a sufficient
quantity of boots, and the competition of buyers for
boots will be greater or equal to the competition of boot-
sellers with each other. In the former case prices will
rise, factories will be enlarged or increased in number,
more operatives will be required, and wages will rise. In
the other case prices will be stationary, and so will be the
demand for and the wages of boot-operatives. The only
competition which in both these eventualities can exist
among boot -operatives is, as to which of them shall
render greater services and earn higher wages than others,
but none of them need go without wages in the boot-
trade. Competition merely assures the result that reward
shall be commensurate with services rendered.
Suppose, however, that either through a miscalculation
as to the number of boot-operatives required, or through
the introduction of labour-saving apparatus, the number
of the former exceeds the requirements of the community.
In that case some operatives will be compelled to leave the
boot -trade and to enter upon some other occupation.
Who shall these be, the best or the worst bootmakers ?
The interest of the conmiunity manifestly requires that it
shall be the worst, those least fitted to make boots.
Competition again ensures this beneficent result. The
worst operatives will be unable to obtain further employ-
ment as bootmakers, and will, therefore, be compelled to
render some other service which the community wants and
for which they are better fitted than for bootmaking.
So far the examination of competition has not revealed
any evil results. This examination has, however, been
made under the assumption of a condition which does not
exist in the real life of to-day, viz. that all those who are
in excess of the number required in any trade or profession
will be able to find employment in some other occupation
for which they are better fitted. This they undoubtedly
could do, provided there were not enough labourers in
some other occupations. When, however, this condition
is absent, when the demand for labour generally falls short
CHAP. XII COMPETITION 173
of the number of men seeking employment, some men
will be unable to find employment anywhere, and the
conditions under which competition proceeds are thereby
profoundly altered. Observe, however, that it is not
competition which has caused this scarcity of employment,
but that, on the contrary, it is this scarcity of employment
which produces the alteration in the character of com-
petition which now must be investigated.
So far competition has been seen to produce these
results : —
(a) To assure to the community the best services in
the satisfaction of its wants with the least sacrifice on its
part.
(i) To secure to every worker a reward commensurate
with the value which the community places on his services.
(c) To weed out of every trade and profession the
men whose services therein are superfluous and least
valuable, and to transfer them to occupations where their
services are more valuable to the community.
If, however, no other occupation is open to the men
so weeded out, all this will be profoundly altered. For
in that case, instead of leaving the trade in which they are
superfluous, these men are compelled to underbid labourers
better fitted for the work than themselves. If, for in-
stance, the best worker in a trade is worth los. a day,
and the worst worker actually employed 8s. a day, em-
ployers will generally prefer the los. man, if these wages
are insisted upon. If, however, some unemployed man,
nearly equal in efficiency to the worst man actually
employed, oflFers to work for 6s. a day, the wages of
these other labourers must fall to, at the highest, 6s. 6d.
and 8s. 6d. respectively, or the inferior labourer will be
the cheapest worker. This competition of workers who
under existing conditions cannot be employed, now re-
duces the wages of all workers. But inasmuch as the
employment of labour is principally determined by the
consumption of that vast majority which labours for
wages, it follows, that every reduction in wages, reducing
consumptive power, must still further reduce the oppor-
tunities for the employment of labour. Competition has
174 DEMOCRACY VERSUS SOCIAUSM partii
now ceased to be beneficial ; it now is a scourge which
flays the backs of the vast majority of mankind, and
which, unless it were counteracted by other tendencies,
would speedily reduce them to a state of abject poverty.
Yet, to regard this result as a cause ; to saddle- com-
petition with the consequences which flow from scarcity
of employment ; to demand the abolition of competition
instead of demanding the abolition of the causes which,
by creating scarcity of employment, distort the action of
competition, is a manifest absurdity.
State-created monopoly, which has been shown to be
the cause of low wages and of consequent scarcity of
employment, is the dam which has been erected across the
stream of industry, the waters of which, directed by the
force of competition, would otherwise bring fulness and
plenty everywhere.
To rail at the failure of the distributive machinery to
fulfil its purpose, when that failure, unjust distribution, is
obviously due to interference with this machinery, is pure
childishness ; more childish still is it to prescribe further
interference as a remedy for the evils arising from existing
interferences. Abolish the dam of State interference with
men's equal rights, the special privileges accorded to some>
and competition, restored to its normal condition, will
distribute the fruits of industry to the door of every one
who takes part in it in proportion with the services which
he renders, and will raise the reward of each to the highest
point which the existing skill, knowledge, and industry of
mankind makes possible.
k
PART III
ETHICS
CHAPTER I
THE DENIAL OF NATURAL RIGHTS
The fundamental ethical conceptions of Socialism we
found to be as follows : ^ —
The denial of abstract or natural rights of individual
members of the State, and the consequential assertion that
all individual rights are granted by the State, which may,
therefore, alter or cancel existing rights or grant new
rights ; the sole consideration which ought to guide the
State in dealing with rights of individuals, being, "the
balance of social advantages."
The first and second of these propositions are clear cut
and need no further elucidation. It is, however, different
with the third proposition, for it is by no means clear
what is meant by " the balance of social advantages," or
how that balance is to be ascertained.
There can be no doubt as to the body to be entrusted
with the determination of the direction in which the
balance of social advantages lies. Socialism confides this
duty to the majority of adult individuals, for majority-
rule is one of its fundamental tenets. Nor is there any
doubt as to the manner in which the majority is to arrive
at its decision. The existence of natural rights being
denied, no general principle for the guidance of the
majority is available, nor can there be any limit to its
action. The question whether a particular measure, say
the legalisation of infanticide, will produce greater social
advantages than disadvantages, can, therefore, be decided
in no other way than by the process of estimating the
1 See Part L chap. iv.
N
178 DEMOCRACY VERSUS SOCIALISM part in
advantages or disadvantages, proximate and remote, which
may result from this particular act. If a majority, having
thus empirically investigated the question, has formed a
favourable opinion of the measure, it ought to be adopted.
The question of right or wrong cannot arise. For inas-
much as natural rights, such as the right of infants to life,
are denied, that only is right which the majority for the
time being has empirically adjudged to be socially advan-
tageous ; and wrong is only that which the majority for
the time being considers to be socially disadvantageous.
Coming now to the meaning of the proposition itself,
two ideas are obviously contained in it. One is, that
measures may be partly advantageous and partly disad-
vantageous to society, and that they ought to be adopted
if the foreseen advantages exceed the foreseen disadvan-
tages. The other is, 3iat a majority of the people can
empirically determine all the sequences, proximate and
remote, of the enforced application of any proposal.
The question still remains in what direction lies the
advantage of society. Society itself is not a sentient being,
capable of feeling pleasure and pain. Sentiency, the
feelings of pleasure and pain, is confined to its constituent
parts, the sentient beings which compose it, individual
human beings. Hence, the welfare of society, considered
apart from that of the units which compose it, is not an
end to be sought. Society exists for the benefit of its
members, not the members for the benefit of society.
Society as such, therefore, can have no claims, except in
so far as they embody the claims of the component
members of society ; social advantage or disadvantage
has no meaning except in so far as the advantage or
disadvantage of its members, present and future, is con-
cerned.
The real meaning of the term, therefore, is, either
that the majority must guide each of its acts empirically
in the direction of securing advantages to the majority,
even if it thereby inflicts disadvantages on the minority ;
or in the direction of securing to all greater advantages
than disadvantages.
One more question, however, remains to be solved,
cH.i THE DENIAL OF NATURAL RIGHTS 179
viz. in what direction is the advantage or disadvantage of
the individuals constituting society to be sought ? Is it
in the direction of increasing the sum of misery ; or is it
in maintaining a state of indifference by an exact balance
of misery and happiness ; or is it in increasing the sum of
happiness, that social advantage is to be sought ? No
injustice will be done to socialists if it is concluded that
they consider social advantage to lie in increasing the sum
of happiness existing within the society, and social dis-
advantage to be equivalent to the increase of the sum of
unhappiness.
The statements here investigated, therefore, resolve
themselves into the following assumptions : —
That it is the duty of the State, acting through a
majority of adult citizens, to secure the greatest possible
sum of general happiness.
That this greatest sum of general happiness can be
secured by empirical considerations of the sequences,
proximate and remote, of any governmental act.
That there exists no general law, deducible from the
nature of men and of their environment, by which the
influence of governmental acts on the sum of general
happiness can be measured.
Three methods of testing the validity of these postu-
lates are available. We may try to discover whether they
are really articles of socialistic belief, or whether socialists
merely endeavour to persuade themselves that they believe
in them ; and we may submit them to the test of deduc-
tion and induction. The present chapter will be devoted
to the first two of these examinations, while subsequent
chapters will deal with the third.
Men having no natural rights can have no natural
right to happiness. If men have no natural right to
happiness, it cannot be the duty of the State to secure
their happiness. The State may endeavour to do so as a
matter of grace ; but it cannot be bound to continue to
do so, and, if it thinks fit, may devote its acts to the
furtherance of their unhappiness. In assuming that it is
the duty of the State to further the happiness of its
members ; in laying down the doctrine that the acts of
i8o DEMOCRACY VERSUS SOCIALISM partiii
the State ought to be guided towards the increase of
happiness, socialists, therefore, admit a natural right to
happiness in the individual members of the State.
Likewise, if the right to individual happiness is assumed
to be not natural, but given by the State, the State can
withdraw not only the happiness, but also the right to it.
Having power to abolish the right to happiness, the State
cannot labour under the duty or securing happiness. The
right to happiness, therefore, cannot be given by the State,
and must be a natural right antecedent to the State. The
socialists' postulate, that it is the duty of the State to secure
happiness, therefore, is contradictory of the other socialistic
postulate that there are no natural rights. It need not be
pointed out that the cogency of this reasoning is not
afFected by the substitution of either misery or indifference
for happiness as the ultimate object of State action. As
long as it is postulated that the action of the State ought
to be guided by any principle, it is tacitly admitted that
there are individual natural rights ; for the obligation on
the part of the State can have no other origin than in the
possession of such rights by the individuals composing it,
as are not derived from and, therefore, cannot be abolished
by the State.
A further contradiction of the denial of natural rights
will be found in the claim for the rule of the majority.
Socialists passionately urge the right of the majority to
impose its will on the minority in all common affairs.
This right of the majority cannot, however, be a right
granted by the State ; for if it exists, it must be ante-
cedent to the State, otherwise the State would be justified
in abolishing it. As a matter of fact, the right is not yet
fully recognised in any State in which Upper Houses, not
elected by a majority of the people, possess the right of
vetoing any legislative act, notably Great Britain and
Germany. In these countries, therefore, the right of the
majority to rule has not been granted by the State, and,
therefore, according to one socialistic doctrine, the people
of these countries do not possess the right to majority-
rule. As Socialism nevertheless claims that they possess
this right, it thereby admits that majority-rule is either
cH.i THE DENIAL OF NATURAL RIGHTS i8i
itself a natural right or deducible from individual natural
rights.
The following reasoning will prove the latter con-
clusion to be the right one, the only possible basis being
the equal right of all individuals to happiness. For if the
acts of the State have any influence on individual happi-
ness, and if some men have a greater right to happiness
than others, a minority may possess a greater aggregate
right to happiness than a majority, and may, therefore,
possess a greater right to determine the conditions con-
ducive to general happiness than the majority. The
claim for majority-rule, therefore, implies the recognition
of equal individual rights to happiness ; therefore it
implies the recognition of individual natural right to
happiness, and contradicts the denial of natural rights and
the assumption that all rights are derived from the State.
This self-contradiction by socialists is still more
apparent in the following case. Justice consists of re-
specting valid claims, and injustice of the infraction of
valid claims, i.e. of rights. Only in so far as men are
possessed of valid claims or rights can they be subject to
just or unjust treatment. If all rights are derived from
the State, if there are no natural rights, injustice can arise
only from the infraction of rights granted by the State.
The State itself, therefore, can neither act justly nor un-
justly, either in granting rights previously denied, or
in cancelling rights previously granted, or in resisting
claims. For inasmuch as under this supposition there
is no rule by which the validity of any claim can be
gauged except the will of the State, it follows that no
claim can be valid which is denied by the State. When-
ever socialists, therefore, assert the injustice of existing
social conditions and institutions, they contradict their
own denial of natural rights. Yet, not only is this asser-
tion of existing social injustice the basis or all socialistic
theories, but it is also made in explicit terms. The follow-
ing instances might be supplemented by many others : —
** A woman inherits from nature the same rights as a
man." ^
1 Bebel, JVoman, p. 122.
1 82 DEMOCRACY VERSUS SOCIALISM part in
" We might define the final aim of Socialism to be an
equitable system of distributing the fruits of labour," ^
implying that the existing system is inequitable, i.e. unjust.
" This then is the economic analysis which convicts
private property of being unjust." *
" Of these three phases of human injustice *' (chattel
slavery, feudalism, wage-slavery) "that of wage-slavery
will surely be the shortest." ^
Justifying murder as a means of resisting the legal
infliction of torture and death by Russian officials, it is
stated : —
"It must be remembered that this is not a case of
Socialism v. anti-Socialism, but of the most elementary
rights of liberty and life."*
"The phenomenon of economic rent has assumed
prodigious proportions in our great cities. The injustice
of its private appropriation is glaring, flagrant, almost
ridiculous." *
These quotations, as well as the preceding examinations,
prove that socialists have not realised all that is involved
in the denial of natural rights, and that their explicit
denial does not prevent them from reasoning as if no such
denial had been given.
It is a justifiable assumption to suppose that socialists
condemn murder and theft for other reasons than that
they have been forbidden by the State. Yet if there are
no natural rights to life and property, murder and theft
would deserve reprobation only to the extent to which
they are forbidden by law and where they are so forbidden.
If the human race has passed through a stage of isolated
individualism, like that of some predatory animals, the
inherent badness of murder and theft would scarcely have
been recognised during such period. When, however, the
gregarious instinct awoke in man, the inherent badness of
such actions could not remain concealed. For not even
the least organised horde could remain together under
conditions in which unprovoked murder and theft were
not limited by sympathy, and without the sympathetic
^ Kirkup, An Inquiry into Socialism, p. 105. ' Fabian Eisays, P* 23.
' Ibid. p. 121. ^ Baz, The EtAics 0/ Sociaiism, p. 70. > Fabian Essays, p. 188.
cH.i THE DENIAL OF NATURAL RIGHTS 183
feeling of abhorrence there would not have arisen the
public opinion which reprobates such actions within the
horde. Weak as this sympathetic feeling may have been
at first, necessary as it may have been to support its action
by fear of retaliation, it is far different with civilised men.
For as man becomes habituated to the social state and
sympathy develops to a larger extent, murder and theft
are no longer reprobated because the law of the State
forbids such acts, but because they are in themselves
repvdsive. The dictates of sympathy are then obeyed
without any thought of acts of parliaments or penitentiaries,
merely because the thought of the wrong inflicted upon
others inflicts suffering upon self. This recognition of a
wrong arising from the nature of the acts themselves and
not from their prohibition, obviously implies the recogni-
tion of corresponding rights, likewise not arising from the
prohibition, but from natural relations.
Though human societies differ widely from each other
in type and development, they nevertheless have certain
features in common. All of them recognise more or less
fully certain rights ; the right to life and property being
the most common. This is not only true of existing
societies, savage, barbarian, civilised, and cultured, but is
equally true of all past societies of which we possess
records. Even in such a society as the Fijian, where the
chiefs had acquired undisputed sway over the lives and
property of commoners ; where certain tribes regvdarly
furnished human victims for cannibal feasts ; where aged
parents were killed by their own sons as a matter of
course, — life and property were safeguarded by strict
customs to which these infractions were recognised ex-
ceptions.
Moreover, these rights become more fully recognised
in the ratio in which the organisation of any society is
developed. The higher the type of the society, the more
extensive and intensive is the recognition of these rights.
The universal history of mankind, therefore, points to
the conclusion that the recognition of human rights is
advantageous to society, i.e. that it works good ; and
conversely, that the non-recognition of human rights is
1 84 DEMOCRACY VERSUS SOCIAUSM partiii
disadvantageous, i.e. that it works harm. If this is ad-
mitted, it must be equally admitted that there exists a
causal relation between the acts of the State and their
sequences, over which the State has no control. That this
is admitted by socialists is shown in the absolute certainty
with which they contend that the present policy of the
State works harm, and that its adoption of a specified
other policy will work good. Socialists, therefore, them-
selves contend that the results which flow from govern-
mental acts are not determined by chance, but that such
sequences form part of the universal and unalterable causal
relation between acts and their results. But if such causal
relations do exist, then the action of the State ought to be
guided by rules deduced from these unalterable causal
relations. To revert to an illustration previously used.
If the universal history of mankind proves murder to be
harmful, the question whether infanticide shall be per-
mitted cannot be usefully or safely decided by balancing
the advantages and disadvantages which at a particular
time seem to result from it in the opinion of one or more
persons, but ought to be decided by the universal rule.
The socialists* postulate that every action of the State,
even those affecting the most fundamental rights of its
members, ought to be guided by considerations of " the
balance of social advantages," ignores the authority and
even the existence of such universally true rules of conduct.
It assumes that the social utility of every act is solely
recognisable by its expected results ; that there is no
possibility of knowing by deduction from fundamental
principles the acts which must be advantageous and the
acts which must be disadvantageous to the community.
Nevertheless, such causal relation as is seen throughout
nature is no less manifest in the relations of social life.
Where justice is expensive or uncertain, or both, contracts
are broken lightly and frequently; where violence goes
unpunished, disorders increase ; where taxation is uncertain
or unjustly apportioned, production is checked ; where
property is insecure, no more than the necessaries of life
will be produced ; where monopolies abound, wealth con-
centrates in the hands of a few.
cH.i THE DENIAL OF NATURAL RIGHTS 185
In these as in all other cases the results which flow
from acts do not depend upon the will of the State or of
the ruling majority, and are unalterable by them. The
State, therefore, cannot control the results of its acts ; these
results are inevitably determined by natural law. How
then can it be held that the acts of the State can confer
rights ? If the State by sanctioning murder could improve
the conditions under which social life is carried on ; if by
sanctioning theft and fraud it could increase the production
of wealth ; if by establishing private monopolies it could
promote an equitable distribution of wealth ; that is, if the
State could control the sequences of its acts, then the State
could also create rights. But when it is seen that these
sequences are beyond the control of the State ; that they
are inevitable consequences of natural law, on which State
law has no influence, and for the appreciation of which no
empirical generalisation is necessary, no such proposition
can be entertained. Rights are then seen to arise naturally,
i.e. from the inevitable connection between cause and result
which prevails throughout nature, and which imposes upon
man the recognition of these rights. These are then seen
to be natural rights, the denial of which, injuriously affect-
ing life, individual and social, decreases the sum of aggre-
gate happiness ; the recognition of which, beneficially affect-
ing life, increases the sum of aggregate happiness. And
it is further seen that though the natural social laws and
the natural individual rights thence resulting are as eternal
and unvarying as the physical laws of nature, their re-
cognition, depending upon the experience of the race as
embodied in its ethical perceptions, is a gradual process,
similar to the ever-widening recognition of the unchange-
able physical laws of nature.^
^ '* Hence there is really but one code of ethics and morals which has been and
always will be as fixed and unchangeable as the forces of nature. But if, nevertheless,
there have been temporary and local differences in ethical views, it is, first, because
knowledge of nature has not everywhere reached the same stage of advancement, and
men often yield to the grossest self-deception in respect of it ; secondly, because there
are whole spheres of human life, like the social sphere, which on account of meagre
knowledge are not considered natural, in which the sway of nature is not conjectured or
presupposed." — Ludwig Gumplowicz, The Outlines ofSociology^ pp. 176, 177.
CHAPTER II
HAPPINESS OR JUSTICE
Every structure of any organism and the corresponding
functions which these structures subserve bear some
relation to the needs of the organism. The evolution ot
the structure proves the corresponding function to be an
adjustment of the organism to the conditions under which
its life must be carried on. The non-fulfilment, in normal
proportion, of any function, therefore, causes the organism
to fall short of the complete life which is possible to it.
If the discharge of any function is neglected, the structure
receives an insufficient supply of blood, which, if long
continued, causes atrophy ; the consequent loss of power
of the particular structure being accompanied by a
corresponding deterioration of the organism as a whole.
If the discharge of function is excessive, the increased
waste is at first made good by an increase of blood-supply
and corresponding hypertrophy of tissues. These com-
pensatory movements, however, being limited in extent,
further excess, leading to imcompensated waste, impairs the
efficiency of the structure and injuriously affects the entire
organism.
During the evolutionary process, pleasurable sensations
and emotions have, necessarily, become the concomitants
of the normal discharge of functions ; while painful
sensations and emotions have become the concomitants of
deficient or excessive discharges. For adjustment to
environment, subserved by the evolution of functional
structures, could not have been achieved by organisms
which habitually underwent painful sensations from normal
CHAP. II HAPPINESS OR JUSTICE 187
cUscharge of functions, and pleasurable sensations from
their abnormal discharges. Likewise, organisms which
experienced no sensations from the discharge of functions,
normal or abnormal, could not have discharged their
functions as efficiently, and would, therefore, have been
less likely to survive than organisms whose discharge of
functions was regulated by corresponding sensations.
Every species, however, is subject to derangements of
these relations through changes in external conditions.
Normal discharge of particular functions, though pleasurable,
may under these new conditions lead to the destruction of
the species, while defective or excessive discharges, though
painnil, may become necessary conditions of survival.
Such derangements are, however, temporary ; for unless
the normal relation is sooner or later re-established by such
modification of structures as will lead to corresponding
sensations being derived from the due or undue discharge
of functions, the species will cease to exist.
Mankind, no less than inferior creatures, is endowed
with this relation between sensations and emotions on the
one hand and the discharge of functions on the other. Nor
is mankind exempt from the disturbance of these relations
through changes in external conditions. On the contrary,
as the change of such conditions has been exceptionally
great and involved during the passage from savagery to
the civilised state, the relation between sensations and dis-
charge of functions has undergone exceptionally great
disturbances in the case of civilised man. That his adjust-
ment to the conditions of social life is not yet complete, is
shown by the, as yet, incomplete relation between his
sensations and the discharge of functions which the social
state imposes upon him. In many cases actions which
must be performed yield no pleasure, and actions which
must be avoided yield no pain. Nay, in some cases,
necessary acts actually cause pain and injurious acts cause
pleasure. But with the further progress of man's adapta-
tion to the social state these incongruities must diminish
as they have diminished during like progress in the past,
and with complete adaptation they must disappear.
The sum of pleasurable sensations and emotions which
I
\
I
1 88 DEMOCRACY VERSUS SOCIALISM partiii
J arise from the normal discharge of all functions constitutes
! happiness. Or, in other words, happiness arises from the
; due exercise of all the faculties. For the only happiness
we know of arises from the satisfaction of desires both
f self-regarding and other-regarding. Desire, however, is
I but the need for some pleasurable sensation or emotion,
/ and pleasurable sensations and emotions are producible
t only by the due exercise of some faculty. The satisfaction
/ of desire being thus dependent upon the due exercise of
) some faculty, happiness, the satisfaction of all desires,
consists in the due exercise of all the faculties. The first
requisite of happiness, therefore, is freedom to exercise all
the faculties.
/ In the social state, however, the sphere within which
/ each can exercise his own faculties is limited by the spheres
f within which others must exercise their faculties. If every
man is to realise the greatest possible happiness, mankind
must be so constituted that each of them finds due exercise
for all his faculties within his own sphere, without encroach-
ment on the spheres of others. This complete adjustment
to social conditions does not yet prevail, inasmuch as
occasionally painful sensations arise from limiting activities
to one's own sphere, and pleasurable sensations from en-
croaching on the sphere of others. It results from this
mal-adjustment, that men are not yet capable of the full
d^ree of happiness otherwise open to them. Nevertheless
is it true that the greatest aggregate sum of happiness can
only arise from a strict limitation of the activities of each
by the like activities of all others. For whenever pleasure
accrues to one through encroachment on the spheres of others,
the resulting increase of happiness to the aggressor is less than
the corresponding decrease of happiness to those aggressed
upon. To their loss of positive pleasure, there is added
the pain arising from the feeling of injury. Not only is
the aggregate of present happiness thus reduced, but there
results also a decline of future happiness. For every such
encroachment disturbs and delays the further adjustment
of character to social conditions, upon which the attain-
ment of complete happiness depends. The fixed condition,
under which alone the greatest aggregate sum of happiness
CHAP. II HAPPINESS OR JUSTICE 189
can be attained in the social state, therefore, is freedom of
each to exercise all his faculties, limited by the like freedom
of all others to exercise their faculties, i.e. justice, the
recognition of equal natural rights.
These considerations show that happiness is not some-
thing which the State can distribute among its members.
For no action of the State can endow every one of its
members with the appropriate organisation which makes
pleasurable sensations and emotions the concomitants of
necessary actions, and painful sensations and emotions the
concomitants of deleterious actions. Hence, any attempt
to distribute happiness would produce deleterious results in
various directions. By disturbing the balance between
sensations and actions it would prevent the necessary
further adjustment of men's organisation to the require-
ments of social life. As the notion of State distribution of
happiness necessarily implies the non-exercise of faculties
otherwise exercised by individual men in procuring their
own happiness, the happiness of each must be diminished
to the extent to which these faculties remain unexercised,
i.e. the attempted State distribution of happiness would
result in a diminution of the aggregate sum of happiness.
And further, as disuse of faculties tends to their deteriora-
tion and ultimate disappearance. State distribution of
happiness, if possible, would result in a diminution of
individual faculties, and, therefore, in a reduction of
individual capacity for happiness.
Moreover, the idea of the State distributing happiness
necessarily implies the further idea of proportionate distri-
bution. What then is the proportion of happiness to be
distributed to each ? If the answer is, that happiness is to
be distributed in equal parts, the impossibility of the
project is obvious. For nothing that the State can do can
procure the same happiness for the antagonistic as for the
sympathetic ; for the passive as for the active ; for the
lethargic as much as for the excitable temperament. If,
on the other hand, happiness is to be distributed unequally,
the question arises. By what rule is the distribution to be
guided ? Is it to be according to merit or to demerit ; or
are the distributers to form an exact estimate of the capacity
190 DEMOCRACY VERSUS SOCIALISM partiii
for happiness of each member of the State, and then to
apportion the available quantity of happiness accordingly ?
Whichever of these courses is chosen, the impossibility of
any distributers making even an approximately correct
apportionment is obvious.
There remains yet another difficulty. What is it that
is to be distributed ? Happiness cannot be cut up and
distributed in parts, nor can it be measured as cloth is
measured by the yard. What then is meant when the
claim is made that the State shall distribute happiness, as
it is made in the socialistic contention that the State ought
to be guided in its actions by nothing else than " the
balance of social advantages," i.e. the measure of happiness
which results from them. The only meaning which can
be imported into the proposition manifestly is, that the
State shall secure for its members the greatest means to
happiness.
Here again, however, it has to be recognised that no
possible distribution of the means to happiness can secure
the greatest sum of aggregate happiness. For if the dis-
tribution of means is to be made in equal parts, as Socialism
proposes, differences in age, sex, constitution, activity, and
mental organisation, would result in some receiving more
and some less than their greatest possible happiness re-
quires. As a consequence, there would be a loss of
aggregate happiness ; the sum of available means could
procure a greater sum of aggregate happiness if it were
distributed in some other way. If, on the other hand, it
were contemplated to distribute the means to happiness
unequally, the same impossibility of making the apportion-
ment conform, even approximately, to any rule which
may be adopted, is as manifest as it was found to be
when a like distribution of happiness itself was considered.
Seeing happiness itself cannot be apportioned ; seeing
also that the distribution of equal means to happiness fails
to secure the greatest possible aggregate sum of happiness,
while no other distribution can be made ; it follows, once
more, that considerations of happiness or social advantage
offer no guidance to the State. The question, however,
still remains, How can the State secure the greatest sum ot
CHAP. II HAPPINESS OR JUSTICE 191
aggregate happiness ? Manifestly there remains but one
way : the State must secure to all the conditions under
which each may obtain for himself the greatest amount of
happiness, i.e. it must secure to all equal opportunities for
the exercise of their faculties. Each must have as full
freedom for the exercise of his faculties as is consistent
with the equal freedom of all others. Therefore, once
more we find, that not considerations of happiness, not
" the balance of social advantages," but justice, the recog-
nition of equal natural right, alone can guide the State so
as to secure the greatest aggregate sum of happiness to its
members.
The same conclusion will be found to be inevitable
when the question is approached in another way. Men
have different standards of happiness ; not only men differ-
ing in race, not only men differing in degree of civilisa-
tion, not only men of the same race and civilisation,
but even the same men at different periods of their lives.
The qualities of external things as apprehended by us arc
relative to our own organism, and, therefore, the feelings
of pleasure and pain which we associate with such qualities
are also relative to our own organism. This is true in a
double sense, for these qualities of external things arc
relative to the structures, as well as to the state of the
structures of our organisms. Not only, therefore, is it
true that "what is one man's meat is another man's
poison," but also, that what is pleasurable at one time is
panful at another to the same individual. The painful-
ness of exercise, otherwise pleasurable, when the body is
in a state of exhaustion ; the distaste for food, after a
hearty meal, which would be keenly relished when hungry ;
the agreeableness of a cold bath in summer, which in
winter is shrunk from ; as well as the pleasure derived
from a fire in winter, which in summer is oppressive, are
but simple examples of this general relativity of pains and
pleasures to structural states.
All these circumstances render it exceedingly difficult
for any individual to estimate the conduct which will
ensure the greatest happiness of himself and of the mem-
bers of his immediate family. Individuals, therefore, more
192 DEMOCRACY VERSUS SOCIALISM part in
and more, allow their conduct to be guided by ethical
considerations, in the sure expectation that conduct so
regulated is more conducive to happiness than conduct
aiming directly at happiness. This difficulty of the
individual, however, is infinitesimal compared with that
of a governmental agency undertaking to determine the
actions which will ensure the happiness of all the members
of the State and of their descendants. Even when the
latter element is disregarded — though it is obvious that
the happiness of future generations is largely aflFected by
present actions of the State — even when the happiness of
living men and women alone is considered, the difficulties
are insuperable.
For the organisation of every individual diffi^rs in
innumerable ways from that of all others and from that of
the persons composing the governing agency. Therefore
the kinds and degrees of actions which will ensure the
greatest happiness of which each of them is capable, differ
from those which will ensure the happiness of all the
others, inclusive of that of the regulators. Nevertheless
the latter must be guided by their own feelings in deter-
mining the kinds, degrees, and sequences of the countless
acts, the totality of which constitutes the happiness of
the innumerable persons, all differently constituted from
them and from each other, the happiness of whom they
endeavour to ensure.
While the difficulty of determining the conduct which
will conduce to the greatest aggregate sum of happiness is
thus insuperable, the like difficulty is seen to exist when
the agencies by which such conduct must be applied are
considered. For the object, individual happiness, and the
agencies by which it can be attained are simple when
compared with the infinite complexity of the object,
general happiness, and its requisite agencies. Aiming
directly at general happiness, the State would require
numerous subordinate agencies, each composed of a gradu-
ated body of numerous officials, most of them unknown
to and unseen by the ruling agency, and acting upon
millions of differently constituted individuals, equally un-
known to and unseen by the rulers. Not only would the
CHAP. II HAPPINESS OR JUSTICE 193
conduct determined upon be coloured and deflected in its
passage through these various agencies in ways which could
not be foreseen, but its ultimate application would again
be determined by the character of officials and of each of
the individuals on whom it is enforced. Therefore, even
if it were admitted that the State could better determine
what is conducive to each individual's happiness than each
can for himself, it would yet be impossible for the State
so to shape its acts as to secure that happiness to each.
Therefore, it is again seen, that the only conduct by
which the State can procure the greatest aggregate sum
of happiness, is to secure to all its members equal oppor-
tunities for the achievement of their own happiness, i.e.
equal opportunities for the exercise of their faculties ; that
is, the State must be guided by no other consideration than
that of justice.
In further confirmation of this same conclusion, the
consideration may be cited, that justice is a more intelligible
aim than happiness. For justice is a question of quanti-
tative measurement. Whenever an infraction of justice
occurs, as when, in a case of individual theft or of that
general theft which arises from monopoly, a benefit is
taken while no equivalent benefit is given ; or when, as
in breaches of contract, obligations discharged by one side
are not discharged or not fully discharged by the other ;
or when in the case of violence one assumes a greater
freedom than the other ; or when the State itself confers
privileges upon some of its members which cannot be
equally conferred upon aU, — the injustice always consists
in the disturbance of an equality and can be measured
quantitatively.
When, however, the object aimed at is happiness, no
definite measure is available. Not only is the measure of
quantity indefinite, but, differing from justice, a quantita-
tive measure also is required and is equally indefinite. As
an end to be achieved, happiness is, therefore, infinitely
less definite and less intelligible than justice.
Finally, the theory of " the balance of social advan-
tages" implies the belief that the State can secure the
greatest sum of aggr^ate happiness by methods framed
194 DEMOCRACY VERSUS SOCIAUSM partiii
directly for this purpose, and without inquiry into the
conditions from which happiness arises. If it be held
that there are no such conditions, one kind of action would
be as effective in securing, happiness as any other kind of
action, and, therefore, no balancing of advantages could
be necessary or beneficial. If, on the contrary, it is
admitted that there are conditions on the compliance with
which happiness depends, then the first step toward happi-
ness must be to ascertain these conditions, while the remain-
ing steps required consist in compliance with the conditions
ascertained. To admit this, therefore, equally condemns
the balancing of advantages as a possible guidance, and
admits that not happiness itself, but compliance with
the conditions which ensure happiness, must be the
immediate aim of the State, i.e. that justice must be its
guide.
Expediency, the guidance by expected proximate re-
sults, proverbiaUy delusive when guiding individual conduct,
is thus seen to be still more delusive when guiding collective
conduct. The theory that there are no natural rights,
that as a consequence the State may usefully shape, and
ought to shape, its conduct by balancing expectations of
social advantage against expectations of social disadvantage,
is shown to be a shallow delusion. From whatever stand-
point the question is approached, there results the con-
viction, that, though there may be additional guidance for
individual conduct, there is only one clear, safe, and infal-
lible guide for collective conduct, the conduct of the State.
That guide is justice, the recognition of equal natural
rights inherent in every member of the State, and entitling
each to equal opportunities with all others for the achieve-
ment of his own happiness.
CHAPTER III
THE ORIGIN AND GROWTH OF LAW
One more proof must be given to show that human rights
are not derived from the State, but are inherent, the State
merely recognising their existence as a necessary condition
of its own existence and continuation. This proof is
furnished by the history of human law.
If rights are not natural, i.e. arising from the con-
ditions under which life must be carried on in the social
state ; if they are arbitrary gifts conferred on its members
by the State, — they must be conferred through laws enacted
by the State. Even if it could be shown that in every
society, past and present, there existed a legal enactment
corresponding to each recognised right, which manifestly
is not the case even in our societies, the conclusion would
not be justified that the right emanated from the law ; that
it had no existence before the law granted it. For it is
obviously possible that the law, instead of creating new
rights, has merely recorded rights previously recognised,
for the purpose that fixed scales of punishment for the
infraction of such rights should ensure their more uniform
recognition.^ But if it can be shown that till a com-
paratively late period the State made no laws, and that>
^ " The Common Law, which had its origin with the Judges, made the following
presumptions in all actions between the State and the subject : — First, that all privil^es,
such as personal liberty, freedom of speech, liberty to trade, right of public meeting,
were the property of the subject and not the gift of the State " (p. lo).
** Those charters of our liberties, Magna Charta, the Petition of Rights, and the Bill
of Rights, are merely declaratory of the existence of these rights. . . . Hence, to the State
British subjects owe none of the fundamental rights which some call natural " (p. 14).
Attacks on Liheriy^ an address by Thomas J. Smyth, LL.B. ; Dublin UniTersity Press^
1890.
196 DEMOCRACY VERSUS SOCIALISM partiii
nevertheless, human rights were recognised, nay, that such
rights were recognised before there was any State and any
law of the State, then it is obvious that human rights are
natural, i.e. that they antedate the State and are derived
otherwise than from the State.
The historical proofs that customs recognising rights to
life and property are antecedent to the formation of the
State, and that, till a comparatively late period, men failed
to entertain even the conception that laws could be made
by the State or any other human agency, have been
furnished by a host of modern writers.^ The present
chapter, dealing for the sake of brevity with European
States only, is mainly founded on Professor Edward
Jenks' valuable and interesting work. Law and Politics in
the Middle Ages.
The first records of Teutonic law consist of the
compilations known as Leges Barbarorum of the sixth
century. Several of these codes contain an account of
their origin. Lex Salica, the code of the Franks, contains
a prologue which describes the collection of its enactments
by four chosen men (whose names and abodes are stated)
after lengthy discussions with presidents of local assemblies.
It also contains the following general observations on the
manner of their origin : " Custom is a long habit founded
upon manners ; it is founded upon antiquity, and an old
custom passes for law." *
Lex Gundobada, the code of the Burgundians, describes
itself as a definition, and bears the seals of thirty -one
Counts as witnesses, and the oldest code of the Alemanni
is known as a Pactus or Agreement.
These codes, therefore, are not laws newly made and
imposed by some authority, but a collection of ancient
tribal customs. This view, now generally admitted, is
confirmed by the fact that they are not territorial laws,
but laws of peoples. They show us the provincials of
Gaul living under the Roman law, of which the conquerors
made no attempt to deprive them. The Salic law specially
^ '* Thus the comparative ttudv of law shomrd that rights arise historically in the
collective or *folk mind.' " — Ludwig Gnmplowics, Tlu OutUnu of Sociology^ p. 91.
' Alexander Sutherland, Origin and Growth of the Moral Senu, volume ii.
CH. Ill ORIGIN AND GROWTH OF LAW 197
refers to "men who live under the Salic law"; and the
oldest part of Lex Ribuaria contains the following passage :
"A Frank, a Burgundian, an Alemann, or in whatever
nation he shall have dwelt, shall answer according to the
law of the place where he was born. And if he be
condemned, he shall bear the loss, not according to
Ribuarian law, but according to his own law." ^
The time and circumstances which gave rise to these
compilations are also not without bearing on the question
of their character. Most of them are the outcome of the
Teutonic emigration to Gaul, and coincide in date with
the conquests of Charles Martel, Pepin the Short, and
Charles the Great.
The probable cause of their origin may, therefore, be
found in the inevitable conflict between the desire of the
conquerors to modify the laws of the conquered by the
introduction of some of their own customs, and the
resistance of the latter, as also in the necessity of reconcil-
ing conflicting practices and providing for new conditions.
Such conflicts and new conditions would make the precise
formulation of claims obligatory, and would thus naturally
lead to the compilation of the customs upon which the
latter were founded.
It is, therefore, an absolute certainty that these codes
are not a collection of new edicts, but a collection of old
tribal customs. The question, however, arises. How did
these customs come into being ? were they the conscious
invention of any governing authority, or the outcome of
an unconscious growth, corresponding with the growth of
the tribal society ? A short exposition of the organisation
of Teutonic tribal societies will establish the truth of the
latter conception, which, moreover, corresponds with the
wider truth, fuUy established, that all primitive customs
originate in the necessities of social life under the supposed
sanction or command of tribal deities.
At the beginning of our era the Teutonic peoples, as
described by Csesar and Tacitus, were living in clans.
The unit of the clan was the household, consisting not of
one family, but of a cluster of families, the males and
^ Law and Politia, p. 9.
198 DEMOCRACY VERSUS SOCIALISM partiii
unmarried females of which were descended trom the
same ancestor. All the households constituting the clan
also are descended, or believe that they are descended,
from a common ultimate ancestor. Within the house-
hold the housefather, generally the eldest male in direct
descent, holds despotic sway, modified by ancient customs.
The other members and the common property of the
household are in his trust {mund\ and he alone speaks
and acts for them. Within the household every member
bears the responsibility for his individual acts, but to the
outside world the members of the household are jointly
responsible for the acts of each of its members. The
injury of one is the injury of all, as the wrong done by
one is considered a wrong done by all. The household
acts and is acted upon as a corporate whole.
In this limitation of the right of vengeance and
liability for revenge to the members of the household,
the blood-feud appears the first manifestation of public
law. Anterior to it, the murder or other injury of one
would be avenged by aU who were interested in the
victim, upon all who were in any way connected with the
aggressor. General slaughter, destructive of the fighting
strength of the clan, was the result. In time there arose
the custom of limitation to the members of the households
to which both parties to the injury belonged, and this
same idea is subsequently extended to offences against
property. The area of revenge and re -revenge is thus
limited, and the consequences of feuds are made less
disastrous to the community.
Nevertheless, the responsibility of the household is
heavy ; for if one is injured and vengeance is taken,
the feud is carried on by the household of the original
aggressor as a sacred duty. Gradually the idea must have
arisen that some real advantage received by the household
in compensation for the loss or injury of one of its
members would lessen the responsibility of each household
and redound to the advantage of the clan. For the blood-
feud weakens both households and the clan, while com-
pensation enriches one of the households and prevents
further weakening of the clan. Thus cases arise where
CH. Ill ORIGIN AND GROWTH OF LAW 199
compensation is ofFered and accepted. At first no doubt
rare and applying to slight injuries only, these cases
gradually multiply and extend to graver offences, until
finally they harden into custom, and the payment of
blood-money or " wer " habitually takes the place of the
blood-feud. The housefathers, as elders of the clan, are
the repositories of its customs. They, therefore, decide
in each case what the compensation shall be, taking into
account the nature of the offence as well as the status of
the injured person. But there is no power to enforce their
finding. If either the plaintiff or defendant refuses to
acquiesce in their judgment the blood -feud takes its
course.
This is the stage of development at which Teutonic
customs had arrived when the Leges Barbarorum were
being compiled. They are principally concerned with
minute and careful regulations of the compensation to be
paid for offences. But they also make it quite clear that
compliance is voluntary, and that the clan has neither
executive nor legislative machinery.
These fects prove the tribal customs, embodied in the
Leges Barbarorum, to have grown and established them-
selves independent of any official authority. The imme-
diate successors of these compilations are the Capitularies
or royal and imperial edicts issued by the Karolingian
rulers and others. They mostly deal with comparatively
unimportant matters, and it is doubtful whether their
validity extended beyond the life of the ruler who issued
them. In some rare cases **capitula" became true additions
to the law of the time, but it must be remembered that
they were a foreign importation imbibed by the rulers
from the Roman law.
During the gradual decay of the Frank Empire a new
law grew up : the law of the fief or feudal law. The
feudal lord administered the law of the fief — generally by
deputy ; a law made by no legislator, but which during
these troublous times had arisen through the mutual needs
of the men of the fief and their lord. It is purely local,
for any dispute as to what is the law of a given fief is settled
by reference to the " greffe " or register of the court, and
200 DEMOCRACY VERSUS SOCIAUSM part hi
if this is silent, the men of the fief are called together and
decide what the law is {enquete par tourbe). Certain
general principles, nevertheless, run through the customs
developed in each fief, and the right of appeal to overlords
tends to produce a certain uniformity. Still the general
truth is, that the court of each fief has its own home-made
law.
As the fief-law applied to men of the fief alone, other
laws had to evolve for men who were not of the fief, such
as priests and merchants. These laws also do not emanate
from the State.
The canon law originates in resolutions of general
councils of the Church and papal decretals, considered as
binding by the clergy, and which, supposed to embody
the divine will, harmonise with primitive conceptions of
the origin of custom and law. To these must be added
ecclesiastical capitularies, issued by the Karolingian and
other rulers, and similar regulations in which secular
authority endeavours to restrict or enforce ecclesiastical
claims.
In time, however, the Church emancipates itself even
from this slight interference of the secular power. The
forgeries of Isidorus Mercator are followed three centuries
later by the Decretum Gratiani, likewise a private work to
which full authority is accorded, and is completed by the
papal compilations beginning in the thirteenth century.
The canon law, the binding force of which was not dis-
puted, is thus, like the laws already considered, neither
made nor administered by the State.
It is similar with the law of merchants. The rise of
more settled conditions during the eleventh century, and,
still more, the Crusades, greatly stimulated commercial
intercourse, which had almost disappeared during the pre-
ceding period of anarchy. Neither the law of fiefs nor
the elder folk-law contained provisions applicable to larger
trade transactions. A new body of law had, therefore, to
be evolved, and was again evolved by those whom it con-
cerned. The usages of merchants gradually hardened into
principles of conduct having the force of law» Though
frequently at variance with the principles of local laws, the
CH. Ill ORIGIN AND GROWTH OF LAW 201
merchant-law was neverthdess universally acquiesced in
and administered by courts of the highest eminence, such
as those of the Hanseatic League and the Parloir aux
Bourgeois at Paris. This, then, is another body of laws,
having cosmopolitan validity like the canon law, which
arises independent of the State, and receives obedience
without any special sanction from the State.
The separate development of law in the three kingdoms
of England, France, and Germany, which have become
definitely established by the end of the tenth century, must
now be followed.
England under Saxon rule had remained largely un-
influenced by the events which moulded the fortunes of
the Continent. Such rudiments of the feudal system as
had established themselves had given rise to a similarly
rudimental state of feudal law. On the whole, however,
the old folk-laws held sway within their several areas.
This arrested development greatly facilitated the work of
legal unification to which the Norman kings devoted
themselves. In this endeavour they were largely aided
by the fact that England, as a conquered land, was a single
fief in the hands of the king. They succeeded in little
more than a century in creating a " common law " of the
realm, the law of the royal court.
This law, however, is by no means a collection of State
enactments ; it is the law of a court. At first the kings
send their ministers round the country to administer local
law in local courts, and to look after the financial and
administrative interests of the king. Gradually differen-
tiation takes place and is accompanied by greater coherence.
Before the end of the twelfth century there has evolved a
royal court with purely judicial attributes, making regular
visitations through the counties, but having its head-
Siuarters at the residence of the king. It devises regular
orms of procedure and keeps strict record of all the cases
which come before it. In their decisions the judges unify
and modify old folk-laws ; precedent is followed by pre-
cedent ; and by the end of Henry III.'s reign, the law
declared in the king's court has superseded local law and
has become the Conunon Law of England. No one gave
202 DEMOCRACY VERSUS SOCIAUSM part hi
the judges power to declare law, or enacted that their
decisions should become the law of the realm. Neverthe-
less, it is the law of the realm, and all bend before its
authority.
Accompanying this spontaneous growth there is, how-
ever, another development which bears some likeness to
the conscious law-making of our time. England, owing
to the conquest, is the domain of the king ; all that he
has not expressly given away belongs to him. Hence he
gives charters in great numbers, which become part of the
general law. Further, as the lord of a domain, he may,
within certain customary limits, make rules for its manage-
ment, and as all England is a royal domain, the king
assumes this power over all England. Hence arise royal
assizes and ordinances, which come very near to modern
ideas of law.
There thus existed in Norman England various bodies
of law, severally declared by kings, judges, landowners,
custom, merchants, and ecclesiastics. Their unification
through the establishment of one law -declaring agency
would be a manifest advantage. This result flowed from
the Great Parliament, where, for the first time, the repre-
sentatives of the several sections of the people came
together in one body. It gave to England a far more
efficient law-declaring agency than any other which then
existed or for centuries arose in other Teutonic countries,
in spite of the fact that the canon law continued to be a
rival of the national law. But even Parliament was not
a law-making body at first. For two centuries it confined
•itself to the enforcement of old customs, or of such new
customs as had met with general observance without its
sanction. Not till the time of the Reformation is the
modern idea of law, made by the State and imposed upon
its members, realised.
The development of English law in one other direc-
tion, that of equity, has yet to be mentioned. When, in
the thirteenth century, as already stated, Parliament had
become the sole law -declaring agency, it still refrained
from enacting new laws. Yet the rapid development of
industry urgently required new laws. Suitors, therefore,
CH. Ill ORIGIN AND GROWTH OF LAW 203
petitioned the Crown whenever the common law failed to
provide a remedy. When the matter was one for legis-
lative declaration, the king, acting through his council,
brought it before Parliament. When the matter was one
for the king's grace, he referred it to his chancellor, who,
as ecclesiastic and president of the king's chancery, could
pronounce on the remedy which conscience would dictate
in the absence of positive law. Gradually this practice
assumed regular shape. Records being kept, successive
chancellors follow the rules laid down by their predecessors,
and failing such, declare rules of their own, which guide
their successors. Thus the Court of Chancery also becomes
a law-declaring court, adding its own laws, based purely
on the perception of natural rights, to those declared by
Parliament.
The peculiar feature in the development of English
law, here briefly sketched, is, that in several directions it
anticipates analogous developments in continental countries
by many centuries. Earlier than elsewhere there arises a
true law of the realm, though other laws also have local or
sectional currency ; earlier also there arises a central law-
declaring agency, though other law-declaring bodies con-
tinue to exist. But — and this is the fact which shatters
the contention that rights are created by the State — the
law throughout grows and develops independent of the
State. It is the creation mostly of the men who must
obey it, and is mostly formulated by persons having no
authority from the State to do so. Even when at last a
parliament arises, possessing powers of legislation, it, for
a long time, abstains from making laws, confining itself
mainly to declarations of what the actual law is. Even
this power it shares with an unauthorised body. The laws
have been made, if they can be said to have been made, by
the common people, merchants, ecclesiastics, and lawyers,
and only to some slight extent by the king. Not a
majority but a consensus of public opinion has evolved
them, and it is this general consensus which has given
recognition to individual rights, and not the State.
The absence of State-law and the recognition of in-
dividual rights through laws arising from other sources is
204 DEMOCRACY VERSUS SOCIAUSM part hi
a feature which stands out still more boldly in the legal
development of Germany and France. Down to the
sixteenth century there is in neither country any national
law, but a medley of feudal, local, municipal, and royal
law, besides the canon law and the law of merchants.
The feudal and local laws of Germany were compiled
for the first time in the thirteenth century by private
compilers. The German Mirror^ the Saxon Mirrory the
Swabian Mirror^ and the LMe Kaiser s Law^ are such
compilations, and were accepted as actual law in spite of
their private origin. Even when, a century later, official
compilations were made {Landrechte)^ they were little more
than new editions of the Mirrors.
In the fifteenth century, however, a new development
takes place. Germany is invaded by the Roman law, and
German law ceases to develop on its own lines. The
Corpus Juris Civilis of Justinian, as expanded by Italian
commentators and glossarists, becomes the common law
of Germany. This usurpation, however, is in nowise the
work of the State. Once more it is the work of private
persons : teachers and writers at the universities, as well as
learned doctors practising at the various courts, declare
the law, and the people accept it.
The Roman law, however, did not displace local laws.
On the contrary, the latter remain supreme. It is only
when other sources fail that the Roman law is appealed to.
The German maxim is : " Town's law breaks land's law ;
land's law breaks common law." ^
These town laws, again, though based on charter pri-
vileges and local customs, are the creation of local courts
{Schoeffen-Gerichte) and not of any legislative authority.
After the Reformation, however, royal legislation also
begins to play a part. The great feudatories of the
empire, having become independent potentates, aspire to
being law-givers as well. New spheres of legislation, such
as aliens, marine, literature, and others, fall exclusively
into their hands, and in many directions they modify local
laws. But their influence is far smaller than that of the
Parliament of England, for the issue of their laws did not
^ Jenlu, Lam and Politics^ P* 53*
CH. Ill ORIGIN AND GROWTH OF LAW 205
interfere with the fullest obedience being paid to older
laws.
Legal development has been closely analogous in
France. Here also the first compilations of existing law
are made in the thirteenth century, such as the Tres ancien
Coutumier of Normandy, the Conseil for the Vermandois,
the Livre de Jostice et Plet for the Orleanais and others.
But, differing from the German practice, these text-books
are not regarded as actual law. This, in disputed cases,
is still ascertained by searches in the register of the court
of the district, or by an enquete par tourbe.
The first official attempt to ascertain what the laws are,
was made by the French kings in the fifteenth century.
Continued through four reigns (from Charles VII. to
Louis XII.) these researches resulted in the compilation
of the official Coutumiers. These show that each district
had its own laws, administered by its feudal seigneur, who
had right of pit and gallows, of^ toll and forfeiture. Of
national law not a trace can be found ; complete anarchy
prevails.
These Coutumiers^ though they henceforth are
authoritative declarations of what the law is, are mere
compilations. No new laws enter into them. The sole
intention is to do away with the necessity for enquites par
tourbe. Therefore, a final enquete par tourbe is held.
Representatives of every order and rank in the district are
called together ; these discuss and alter the compilation,
and finally declare it to be a true exposition of the ancient
customs of their district.
Other laws, however, co- exist with the Coutumiers.
In Southern France, the pays de droit ecrity a modification
of the Roman law, continues to prevail ; cities and towns
have each developed their own law through their local
courts, cours d'echevins; there is the law of merchants
and the canon law, and, finally, royal law also appears as
an important factor somewhat earlier than in Germany. As,
by conquest, province after province is added to the domain
of the Crown, royal ordinances are extended to them.
The new spheres of legislation also fall into the hands of the
king, who, from time to time, also succeeds in encroaching
2o6 DEMOCRACY VERSUS SOCIALISM part in
on the domain of older laws. But, in the main, the condition
is the same as in Germany. Older laws remain intact, and
the royal laws mostly cover but a comparatively small area,
and cover that incompletely. The revolution at last makes
tabula rasa of this anarchic condition, imposes a national
law, and, for the first time in France, realises the modern
idea of uniform law made by the State.
This necessarily much abridged and hasty survey of
the evolution of modern law reveals the following facts : —
Law, till comparatively recent times, is not made by
any legislative authority. Originating in customs, the
result of experience confirmed by the actual or supposed
commands of ancestors, its sole authority, for a long time,
is its antiquity or supposed antiquity. Even when, at last,
law is recorded and loses its previous flexibility, alterations
of previous law as well as new laws, required by social
necessities, are not imposed by the State. They develop
and grow, and when general approbation has been given to
them, they are finally declared by various authorities, the
last comer among which is the State. Finally, there arises
the questionable notion that the State can make laws
instead of merely declaring what the law is. It is clear,
therefore, that, during by far the greater part of our era,
the State made no laws, and that the human rights recog-
nised during this period and transmitted to the present
time were not and are not granted by the State or any other
governing authority, and that, therefore, they are natural
rights. Whatever test is applied to the socialistic view of
human rights, shows it to be erroneous, and, therefore, the
system which is based upon that view must be a false
system.
CHAPTER IV
NATURAL RIGHTS
The purpose for which organised society exists being the
furtherance of the happiness of all the members of society —
the only manner in which this purpose can be fulfilled
being the maintenance of the equal natural rights of all
the members of society, — it follows that it is the duty of
organised society, the State, to secure to all the full
possession of their natural rights, i.e. to secure to each of
them the fullest opportunity for the exercise of all his
faculties, consistent with the equal opportunity of all others
for the exercise of their respective faculties. Not only
must there be no invasion of the sphere of any individual
by other individuals, but the State also must abstain from
any further limitation of the sphere within which each is
free to act than suffices to maintain the equal freedom
of all.
Which are the natural rights, which, placed beyond the
reach of any majority, cannot be limited or denied without
injustice and consequent loss of happiness ? To deal at
length with all of them would transcend the scope of
this inquiry. Neither Socialism nor any instructed In-
dividualism denies the right to free speech and publication,
free thought and worship ; the right of marriage or the
equal political rights of all adults of both sexes. Other
natural rights are either denied or at any rate not so fully
understood either in their extension or limitation, and
must here be dealt with. This will be done in the
following chapters.
CHAPTER V
THE ETHICS OF DISTRIBUTION
Th e only means by which the State can assure the greatest
aggregate sum of happiness to its members we found to be
the observance of justice, i.e. securing to all equal oppor-
tunities for the exercise of their faculties. In ordbir. that
any one of them may exercise his faculties, he must satisfy
the primary necessity of life, nutrition. In order that all
may obtain food, some or all must exercise faculldes in the
•production of food. The question arises, to ^hom right-
fully belongs the food and other desirable thing^ which
any member of a society has produced by the ex6-cise of
his faculties ? r "■ , ,
Socialism, as already shown, replies, that the wealth
produced by any and all the members of the State belongs
to the State. The reasons by which this view is supported
have been quoted verbatim.^ Before dealing ^th theni^ our
independent inquiry into the ethics of the relations between
State and citizens must be carried a step further than has
so far been done.
From the sociological standpoint, ethics are a definite
account of the forms of conduct which are fitted to the
social state, i.e. which will enable each miSQiber to live the
fullest and longest life, while rearing a due number of off-
spring. Differing from mere aggregations of animals, and
even from those earliest human groups in which the purpose
of contiguity is mainly mutual defence against external
aggression, the social state implies efFectu^ co-operation
in defence against external and internal aggression, as well
^ Part I. chap. v. p. 41.
CH. V THE ETHICS OF DISTRIBUTION 209
as in industrial activities. In the more highly developed
social .state, this latter object, industrial co-operation, is
both more important and more continuous than defensive
co-operation. The prosperity of any society, therefore,
mainly depends on the extent to which the conditions for
effectual co-operation, and especially industrial co-opera-
tion, are fulfiUed. If these conditions are observed to a
due extent, those individuals whose nature is most disposed
to effectual co-operation will, on an average, live longer
and leave greater progeny having similar tendencies.
The whole society, thus brought into an ever better
adaptation to the conditions of social life, will not only
experience the greatest sum of aggregate happiness, but
will also supplant other societies in which the conditions
for^ effectual co-operation are less favourable.
In'' order that the sentiments which make for social
conduct may develop, each member of the State must reap
more good than evil from social union. The loss from
internal aggression, individual and social, must be less than
the gain from industrial co-operation and from reduction
of external aggression. The increase of egotistic satis-
factions yielded by the social state is, therefore, obtainable
only by an altruism which, to some extent, recognises the
claims of others. Where this altruism is developed so
little that f(?ar of retaliation is the only restraint, the gain
from social union is comparatively small. Not only are
aggressions frequent and extensive, causing great loss, but
the gains from co-operation are small, because co-operation
is limited in intensity and extensity by such aggressions.
The gain increases in both directions as this pro-altruistic
sentiment develops in the direction of the altruistic con-
ception of equal rights, i.e. as the recognition of the equal
rights of others becomes voluntary and geiieral. It is
greatest where the conditions are such that each can satisfy
all his needs and rear a due number of oflfepring, not only
without hindering others, but while aiding them in doing
the like. What then is the conduct from which evolve
the sentiments producing this highest development of
social life ? The following exposition will furnish the
answer to this question.
2IO DEMOCRACY VERSUS SOCIAUSM PART III
The evolution of every species of higher animals is
dominated by two laws, one egotistic, the other altniistic.
The latter is, that during immaturity of the individual the
benefits which it receives must be inversely proportioned
to its capacity ; for the continuance of the species
depends upon a due number of offspring being reared.
During infancy the life of all young animals is dependent
not on their own efForts, but upon parental care. During
gestation the embryo derives its nutrition gratuitously
from the system of the mother. After birth, the greater
or less helplessness of the young animal requires the
gratuitous supply of food and defence against enemies by
either or both parents ; the rendering of these services
becoming less and less necessary as, with the approach of
maturity, the animal becomes better able to help itself.
Other things being equal, therefore, that species will
become most numerous and will supplant allied species
in which the parental sentiment, compelling services being
rendered inversely to the capacity of the offspring, is most
highly developed, and similarly, within the species, the
offspring of those possessing this sentiment to a higher
degree will supplant the offspring of others.
The human offspring is helpless and dependent for a
longer period than that of any other species, and the
parental sentiment and emotions are proportionately more
highly developed. In the higher races of men, the love
and protecting guardianship of the parents follow their
children even beyond the parental home, fostering the
growth of the allied emotions which cause children to
return the parental love and its gifts when in their turn
parents grow into advancing helplessness. The law, there-
fore, applies in every respect to the human species as well.
In early infancy the care bestowed must be incessant on
account of the absolute incapacity of the human baby. As
the child grows older, services previously rendered by
mother or nurse may now be assumed by the child itself ;
as the young men or women approach maturity and become
able, through the performance of services, to obtain their
own sustenance, the gratuitous provision of sustenance by
parents is curtailed and ultimately withdrawn. Here also.
cH.v THE ETHICS OF DISTRIBUTION 211
benefits conferred are inversely proportioned to capacity,
and those parents on an average will rear the greatest
number of similarly disposed children, in whom the senti-
ments which prompt to this parental sacrifice are strongest ;
and those societies will outnumber and displace others in
which these sentiments are most generally and strongly
developed. Those parents in whom the sentiments
prompting to sacrifices for the benefit of children are
weakest, will, other things being equal, rear the fewest
children ; their progeny, possessing similar natures, being
ultimately displaced by that of parents in whom the
parental emotions are more highly developed.
Self-sacrificing parental love is the first of the emotions
which prompt to altruistic acts. The sympathy which
it engenders, extending to wife, brothers, sisters, and
parents, widens into sympathy with the clan, the tribe,
and the nation, and blossoming at last into that general
feeling of beneficence which, counting all mankind
as kin, prompts generally to beneficent acts. This
social altruism, however, lacking certain elements of
parental altruism, never can attain the same intensity.
Yet that it may generally attain a high level ; that minister-
ing to others' happiness may become an indispensable con-
dition of self- happiness ; and that the happiness thus
derived may be more intense and may be preferred to
happiness derived from egotistic acts, may be seen in ever-
multiplying instances of men and women who thus secure
their happiness. Such voluntary beneficence, however,
cannot be carried permanently to an undue extent. For
the more generally sympathetic being, on an average,
those in whom the parental emotions are also most highly
developed, will not tax their resources for the benefit of
others beyond the limit which allows a better bringing-up
being given to their own children than to those of others.
The other law is, that after maturity has been attained,
benefit must be proportioned to capacity ; capacity being
measured by fitness for the conditions of life. On no
other plan could the evolution of higher types of life from
lower types have taken place, than that among adults the
well-fitted shall profit by their fitness, and that the ill-
212 DEMOCRACY VERSUS SOCIAUSM partiii
fitted shall sufFer through their unfitness. To see the
absolute truth of this proposition, it needs but to imagine
a species in which benefits were proportioned to ineffici-
ency. In such case inferior would habitually survive
superior and leave a greater number of progeny of like
unfitness. A gradual retrogression woiid result, until
the species, becoming less and less adjusted to the con-
ditions under which the lives of its members must be
carried on, would be exposed to universal suflfering, end-
ing in extinction.
When, on the other hand, the more eflicient experience
the benefit of their efliciency, and the less eflicient sufl^er
the penalty of their inefliciency, the progeny of the more
eflicient, inheriting more or less of this better adaptation,
will gradually displace that of the less efficient. The
species as a whole will gradually become better adjusted
to the conditions under which the lives of its members
must be carried on, and an increase in the aggregate sum
of happiness must result, as well as the tendency to still
further change with changing conditions, on which depends
the evolution of higher types.
The survival of the fittest thus ensures that the
faculties of every species tend to adjust themselves to the
conditions under which the lives of its members must
be carried on. It must be the same with men ; with
faculties which are termed moral as well as with those
which are termed physical. From the earliest times,
societies composed of men whose feelings and conceptions
were congruous with the conditions to which they were
exposed, must, other things being equal, have multiplied
faster, and must have displaced those whose feelings and
conceptions were incongruous with their conditions. Con-
gruity, more or less, of individual nature to the conditions
of social life, therefore, is the essential condition of human
existence in the social state, and that society will experi-
ence the greatest aggregate sum of happiness and will
survive all others, the average nature of the members of
which is most congruous with the conditions of social life.
In order that this highest average congruity may result,
those whose nature is more congruous must, on an aver-
cH.v THE ETHICS OF DISTRIBUTION 213
age, survive those whose nature is less congruous, and the
former must rear a greater number of similarly adapted
children than the latter. In no other way can this gradual
adjustment and ultimate complete adaptation be achieved.
Not only the present, but still more the future happiness
of mankind, therefore, depends upon compliance with the
law, that every adult shall experience the consequences of
his own conduct ; that the more efficient shall reap the
advantage of their efficiency, and that the less efficient
shall suffer the disadvantages of their inefficiency.
The laws governing the distribution of wealth in the
social state, therefore, are, first, that all individuals shall
enjoy full and equal opportunities for the exercise of their
faculties in the production of wealth ; second, that each
of them shall possess all the wealth which the exercise of
his faculties may produce from such equal opportunity.
Not equality of wealth, as Socialism posits, but equality of
opportunity and inequality of resulting wealth is thus the
social condition which justice imposes.
The law here set forth may seem repulsive to persons
who, much affected by suffering which they actually
witness, are indifferent to all other suffering. Neverthe-
less does the highest altruism demand conformity of
general conduct with its dictates. Private beneficence
may advantageously smooth its hard edges ; may in many
ways soften the inevitable suffering of the inefficient, the
less efficient, as well as of the more efficient when
occasionally overtaken by misfortune. But a general
departure from the law would be unethical in the highest
sense. For a people which in its corporate capacity
abolishes the natural relation between efficiency and re-
ward could not possibly survive. Either it mil expose
itself to the miseries and unhappiness of slow decay, or it
will be conquered and absorbed by a people which has not
undermined its efficiency by the policy of fostering the
survival of its inferior at the expense of that of its superior
members.
Suflfering is the inevitable concomitant of man's as yet
imperfect adjustment to the social state, and the only
means by which a more perfect adjustment and consequent
214 DEMOCRACY VERSUS SOCIALISM PART III
increase of happiness can be achieved. If mal-adjustment
were not productive of unhappiness, or if it produced
happiness, man's nature could not evolve into greater
congruity with the requirements of social life.
Moreover, incapacity causes unhappiness to the incap-
able, directly through overtaxing deficient faculties, and
indirectly through non-fulfilment of certain conditions of
welfare. Conversely, capacity brings corresponding happi-
ness to the capable, directly through easy and complete
performance of tasks, and indirectly through the fulfilment
of conditions necessary to welfare. Not only self-happi-
ness, but other-happiness as well, is furthered by capacity
and hindered by incapacity. The healthy, capable man,
overflowing with joyfiil energy, spreads happiness around
him through sympathy with his mental state. Finding
self-maintenance easy, he can still further add to others'
happiness by altruistic acts. The incapable man, on the
other hand, whose faculties are overtaxed and whose spirits
are depressed by non-success, becomes a source of depres-
sion to all around him, and is less capable of furthering
others' happiness by altruistic acts.
In the social state all members suflFer from the in-
capacity and profit through the capacity of any of them.
Deficiency of labouring power, physical and mental,
results in a smaller aggregate of produce and in a conse-
quent reduction of the share available for each. Excep-
tional labouring power, especially mental power, on the
other hand, increases the aggregate produce, not only by
the additional production of the more capable, but by
increasing the productive power of less capable members
as well. Organisation, inventions, discoveries, are all the
work of the more capable, but add to the productive power
of many.
Other defects of some individuals similarly reduce the
productiveness of the labour of many. Selfishness pro-
duces friction ; dishonesty entails the waste of labour in
supervision and other precautionary employments ; both
defects thus reducing the aggregate produce of the general
labour.
In addition to the negative evils caused by incapacity,
cH.v THE ETHICS OF DISTRIBUTION 215
there arise positive evils as well. Paupers, hospital
patients, and lunatics must be maintained, who consume
without producing, as also the widows and orphans of
those who, through weakness of constitution or intemper-
ate habits, die early. Without further prosecution of this
argument, it will be apparent, that the happiness of every
member of the social body is raised by increase in average
capacity, intelligence, and conscientiousness, and that every
reduction in the average of these qualities lowers the happi-
ness of all.
One further result of selfishness, however, may yet be
alluded to. The selfish person, missing the pleasures
derived from altruistic emotions and actions, fails to ex-
perience the greatest and most enduring happiness, while
suffering positive unhappiness when, during his more
advanced years, selfish pleasures pall. On the other hand,
those whom altruistic sentiments prompt to corresponding
acts, thence derive positive happiness, while escaping much
unhappiness. That others' happiness is likewise furthered
by those possessing altruistic natures and hindered by
those possessing selfish natures, needs no proof.
It follows Qiat the aggregate sum of happiness in the
social state is dependent upon the aggregate adjustment
of the society to the condition imposed by that state.
These causes, however, extend beyond any one generation.
Parents having vivacious minds and vigorous bodies are
likely to transmit like sources of happiness to their oflP-
spring, while unhappiness is entailed upon the progeny of
parents having feeble minds and impaired physical con-
stitutions. The emotional organisation which prompts to
altruistic acts is similarly transmitted from parents to oflf-
spring, and with it the happiness to which it gives rise.
Likewise selfish, licentious, and dishonest parents are
likely to transmit similar natures to their progeny.
Future generations, therefore, are largely dependent for
their happiness upon conditions transmitted from the
present generation. Hence, social acts which further the
multiplication of those less adapted to the social state
lessen the aggregate of present and future happiness ;
social acts which, in due degree, further the multiplication
2i6 DEMOCRACY VERSUS SOCIALISM partiii
of the better adapted increase the aggregate of present
and future happiness. The former, therefore, are un-
ethical, the latter ethical ; and the law that adults take the
consequences of their own nature and that their progeny,
inheriting, on an average, like natures, also take such con-
sequences, tends to raise the aggregate sum of happiness
by furthering the multiplication of those capable of ex-
periencing and conferring most happiness, and hindering
the multiplication of those less capable of experiencing and
conferring happiness.
One more consideration must be alluded to. If it is
admitted that men's nature is changeable imder changing
conditions, every proposal affecting social conditions must
be examined with regard to its tendency to further or
hinder progress towards the highest social conditions, and
the correlative development of the highest human nature.
Social conditions which, exempting men from the conse-
quences of their own acts, withdraw the stimulus which
the knowledge of such consequences supplies, must hinder
the evolution of men's nature in the direction of this final
goal. Disassociating reward from service rendered, they
hinder the growth of the sentiment of justice, which, con-
trariwise, is furthered by the daily association of reward
with service arising from free contract. Inflicting injustice
upon some, in order that undeserved benefits may be given
to others, it hinders the development of altruistic senti-
ments in both directions. The development of mankind
towards the highest physical, mental, and moral condition
is, therefore, dependent in two ways upon the State ab-
staining from any general interference with the law, that
every adult shall reap the consequences of his own acts :
first, because the action of this law furthers the modifica-
tion of men's nature in this, the highest direction ; second,
because it ensures the multiplication of those possessing
such modifications, ultimately making the latter permanent
and general acquisitions.
The faculties and emotions which make for efficiency
in the social state, while partly identical, are partly diflFer-
ent from those which make for efficiency in the sub-human
and savage states. Parental and marital aflFections and
cH.v THE ETHICS OF DISTRIBUTION 217
the sacrifices to which they prompt, alike in kind though
difFering in degree, make for efficiency in both states.
Such traces of the sentiments of justice and beneficence
as may be observed among higher animals, add to their
efficiency, while in the social state these same sentiments
highly developed are an essential condition of efficiency.
For co-operation is furthered not only by the disapproval
of aggression which the sentiment of justice implies, but
also by assistance being voluntarily rendered without the
expectation of an equivalent.
The greatest diflTerence, however, arises from the fact
that while animals, and to some extent savage men as well,
are restricted to such food as nature produces spontane-
ously, man in the social state produces his own food and
other means for the satisfaction of desires, and produces
them co-operatively. This co-operation in satisfying
desire, whether it consists of the division or combination
of labour, co-ordinates efficiency with service. Whoever
produces anything which enters the circle of exchanges
renders a service to all other men, making it easier for all
to satisfy their desires, not only the desires for this parti-
cular thing, but for all things. The efficiency of any
individual for <he social state, therefore, largely depends
upon his possession of faculties enabling him to render
services to others through the eflTort to sustain himself, and
upon the emotions which prompt him to render such
services adequately. Capacity, industry, honesty, enabling
and prompting their possessors to direct their self-sustain-
ing labours towards rendering greater services to others
than are rendered by those who are less capable, less in-
dustrious, and less honest, must be accompanied by greater
rewards than those others receive, if the whole community
is ultimately to become more honest, capable, and in-
dustrious. The self-sustaining faculties and emotions
purely egotistic in the sub-human and savage state, thus
become partly altruistic in the social state. In the former
they enable tl.eir possessor to survive and leave progeny
at the expense of others ; in the latter they enable him to
do so while aiding others. Nature is " red in tooth and
claw " below the social state ; within that state she com-
21 8 DEMOCRACY VERSUS SOCIAUSM part in
pels men to achieve the advantage of self by conferring
advantages upon all others.
These considerations leave no doubt as to what is the
clear and imperative duty of the State with regard to the
distribution of wealth. For they show that any action of
the State in the direction of equal distribution, demanded
by Socialism, would be socially deleterious, because it
deprives the more efficient members of the State of their
due reward, in order to hand it over to- the less efficient.
Constituting non-compliance with one of the natural laws
in obedience to which all life has evolved, the law that
adults take the consequences of their own natures and
acts, it inflicts upon society the penalties which such dis-
obedience inevitably entails. Gradual adjustment to the
necessary conditions of social life being prevented by the
survival of the less efficient and less congruous, progress
towards a higher social state and towards a higher type
of human nature ceases. The suflTering entailed by exist-
ing mal-adjustment is perpetuated and the attainment of
a greater sum of aggregate happiness is prevented, with
the ultimate result, that a society thus made stationary,
if not retrogressive, must be supplanted by societies
in which conditions favourable to further evolution are
maintained.
The reluctance to accept these conclusions arises largely
from existing interferences of the State with the law that
every adult shall reap the consequences of his own acts,
through the creation of legal privil^es, especially private
ownership of land^ and the consequent absence of equal
opportunities for all. The monopoly of opportunities by
a few, rendering nugatory the eflTorts of many whose
natures are better adapted to the conditions of social life,
prevents them from leaving a due number of children ;
while the owners of these opportunities, though they may
be less adapted, are by their possession enabled to rear a
larger number. Further, the acquisition of special privi-
leges is furthered by unsocial qualities, such as cunning,
dishonesty, and greed, while their possession and inherit-
ance confer reward without service or adequate service
rendered, and thus still further disturb the natural relation.
CH. V THE ETHICS OF DISTRIBUTION 219
Under existing conditions, therefore, reward being largely
severed from service rendered, the survival of the socially
fittest is disturbed, and many, socially less fit than others,
nevertheless survive, and leave a greater number of de-
scendants. These facts, however, so far from contradict-
ing the general theory and the conclusions based thereon,
tend to their confirmation.
Moreover, the disappearance of the less fit from exist-
ing societies is nevertheless proceeding at a comparatively
rapid rate. Public opinion, tending ever to become more
healthy and exacting of compliance with higher ethical
standards, represses unsocial conduct. Discourtesy, dis-
honesty, untruthfulness, laziness, cruelty, sexual mis-
conduct, and drunkenness are visited with strong social
disapproval ; while courtesy, truthfulness, honesty, mercy,
beneficence, application, and self-restraint excite more and
more approbation. As a consequence, unsocial conduct is
discouraged and social conduct encouraged ; social senti-
ments are strengthened, and unsocial sentiments weakened.
Hence heredity is modified by practice ; the unsocial
sentiments are weakened in their possessors, who transmit
more adapted natures to their children than they them-
selves inherited, causing the gradual disappearance of such
unsocial natures in a few generations.
On the other hand, those whose unsocial tendencies are
too strong to be repressed by the general sentiment, tend
to die out. The self-indulgent, the drunkard, and the
profligate, as well as the criminal classes, leave few children.
Though many children are born to many of them, they
mostly die in infancy or adolescence, partly through want of
due parental solicitude, partly through the inheritance of
enfeebled constitutions. The surviving children, inheriting
like tendencies, also leave few children, and in a few gene-
rations the strain has ceased to exist.
Under conditions of social justice, when no legal
monopoly -rights exist, the disappearance of the un-
adapted, however, would be far more rapid. Reward
being apportioned to service rendered, the artificial dis-
turbance of the survival of the fittest would terminate.
Qualities which now, by the acquisition of legal mono-
220 DEMOCRACY VERSUS SOCIALISM PART III
polies, lead to the acquisition of fortunes and power, would
not benefit their possessors, and would therefore tend to
disappear. The comparative equality of possessions, and
disappearance of involuntary poverty, creating a more
homogeneous society, would add to the force of public
opinion, and make that opinion still more exacting of ethical
conduct. At the same time the temptation to unethical
conduct, arising on the one hand from excessive riches,
on the other from poverty, especially from poverty in
city slums, would be materially lessened by the scarcity of
either condition. All these forces would unite to the
modification of inherited tendencies in the direction of
gradual and better adaptation to the conditions of social
life. The remainder — individuals endowed with such un-
social natures that these influences would fail to modify
them — ^would be comparatively few, and their disappearance
would, therefore, be still more rapid. The more eflficient
would still receive the reward of their greater eflficiency,
and the less efficient would still suflTer for their inefficiency.
But as the diflTerences in efficiency would be lessened by
raising the social efficiency of the great majority, the suflTer-
ing would be comparatively slight, and the time would be
materially hastened when, all mankind being approximately
adapted to the requirements of social life, unsocial con-
duct and consequent suflTering would disappear.
The foregoing examination shows that the distributive
proposal of Socialism is in the highest degree unethical
and disastrous to the present and future wellbeing of
mankind. An examination, in the light of evolutionary
experience, of the reasons by which the exponents of
Socialism support this proposal, shows them to be as futile
as they are crude. These reasons will now be dealt with
in the sequence in which they have been enumerated in
Part I. chap. iv.
The first of these is the allegation, that under the far-
reaching co-operative processes of to-day, it is impossible
for competition to ensure to every co-operator a reward
commensurate with the services rendered by him.
It is true that, under existing conditions, competition
fails to assure to each co-operator in the co-operative
cH.v THE ETHICS OF DISTRIBUTION 221
system of production a reward accurately proportioned to
the services rendered by him. This failure, however,
obviously does not justify a proposal which aims at the
absolute severance of reward from service rendered. On
the contrary, it imposes upon society the duty to remove
those interferences with the action of competition which,
causing it to be one-sided, prevent its tendency to pro-
portion reward to service coming into full play. What
these interferences are, has been pointed out in Part II.
The second line of reasoning is based on the con-
ception, that "the special ability or energy with which
some persons are born " is the result of ancestral evolution,
and, therefore, a social product which, as such, belongs to
society as a whole.
Not only the special energy and ability of some, but
all the faculties and emotions of every individual, are the
result of ancestral evolution. The claim, founded on this
consideration, that the results of the exercise of special
ability and energy, the so-called " rent of ability," belong
to society, overlooks several important facts. The first of
these, elaborated above, is, that by delaying, if not pre-
venting, the rearing of a more numerous progeny by those
possessing special ability and energy, it is detrimental to
the further evolution of all members of society in this
direction. The other is, that special ability and energy as
such produce no results, not even any " rent of ability."
In order that such results may be produced, these qualities
must be used productively. When so used they not only
benefit their possessors, but, under just conditions, all
other individuals as weU. The aggregate sum of happi-
ness, therefore, is increased in two ways by the exercise of
special ability and energy : first, in the greater happiness
which their exercise brings to their possessors ; second, in
the greater means to happiness which it places within the
reach of all others as well. The incentive to the exercise
of these qualities is the special reward which it brings to
their possessors. If that reward is withdrawn, as by equal
distribution it would be withdrawn ; if it is made as well
to be inferior as to be superior, the exercise of special
ability and energy will be cUscouraged, and the happiness
222 DEMOCRACY VERSUS SOCIALISM part in
not only of their possessors, but of all other men as well^
will be diminished.
Moreover, to compare the increased reward derived
from the exercise of special ability with the so-called
" unearned increment " of rent is merely another proof of
the radically defective analysis of economic facts habitual
to socialists. For while an increase of rent comes to the
owners of land without any service rendered by them, and
as a deduction from the total result of the social product ;
any increase in reward derived through the exercise of
special ability is dependent, under natural conditions, upon
additional service rendered by the possessors of special
ability, which service adds more to the social fund than
the reward amounts to which those who render it can
possibly receive.
The third argument is, that the reward which any one
receives " depends entirely upon the desires and needs of
others for his services " ; the value of the services, being
thus a social product, belongs not to him who renders the
services, but the society.
It is undoubtedly true that the power of every
individual to supply his wants in the co-operative
industrial society depends mainly on the desire of others
for his services. But the conclusion to which this fact
points is not that he must be deprived of the reward which
these others are willing to give him for his services. On
the contrary, as the satisfaction of their desires for his
services enhances their happiness, he who renders these
services is entitled to a reward commensurate with the
happiness which he confers. It is the expectation of this
reward which stimulates his efforts to render services, i.e.
to confer happiness ; and it is this reward which, enabling
him who renders greater services than others to rear a
greater number of offspring, will ultimately increase the
services rendered by all. To deny a greater reward than
the average to him who confers more than the average
amount of happiness by his services, in order to increase
the reward of him who confers less than the average
amount of happiness by his services, must, therefore, reduce
the aggregate sum of present and fiiture happiness.
CH. V THE ETHICS OF DISTRIBUTION 223
The fourth and last line of argument is that adopted
by Mr. Edward Bellamy, and consists of the foUowing
reasoning : Society as such enormously increases the
productive capacity of every man, and, therefore, all the
produce of every man's labour, and not merely the
addition due to his participation in social advantages,
belongs to society and not to the producer.
The way in which this apparently illogical contention
is arrived at is shown in the following quotation : —
" This analysis of the product or industry must needs
stand to minimise the importance of the personal
equation of performance as between individual workers.
If the modern man, by aid of the social machinery, can
produce fifty dollars* worth of product where he could
produce not over a quarter of a dollar's worth without
Society, then forty-nine dollars and three-quarters out of
every fifty dollars must be credited to the social fund to be
equally distributed. The industrial efficiency of two men
working without Society might have differed as two to
one — that is, while one man was able to produce a full
quarter-dollar's worth of work a day, the other could
produce only twelve and a half cents' worth. This was a
great difference under those circumstances, but twelve and
a half cents is so slight a proportion of fifty dollars as not
to be worth mentioning. That is to say, the difference
in individual endowments between the two men would
remain the same, but that difference would be reduced to
relative unimportance by the prodigious equal addition
made to the product of both alike by the social organism." ^
The fallacy in this reasoning is so clear that he who
runs can read it. The existence of the social organism
increases, according to the hypothesis, the value of one
man's work from twenty-five cents to fifty dollars. Does
it necessarily increase to fifty dollars also the value of the
work of him who only produces half as much ? If, for
instance, one man makes one pair of boots a day, while
another man produces two pair of boots in the same time,
does the soci^ organism increase the value of the one pair
of boots to exactly the level of that of the two p^ of
^ Ef Malay ^ p. 8i.
224 DEMOCRACY VERSUS SOCIALISM part hi
boots ? If not — and it will be admitted it does not ; that,
on the contrary, the two pair of boots are worth exactly
twice as much as the one pair under any given social
conditions — it follows that the social organism does not
make an " equal addition to the product of both alike."
In the given case, therefore, Society increases the value of
the one man's work from twelve and one-half cents to
twenty-five dollars, and the value of the other man's work
from twenty-five cents to fifty doUars. By appropriating
the product of the labour of both. Society, therefore, does
not extend approximately the same treatment to both of
them, but the inequality of treatment thus meted out is of
immense importance.
For it is clear that neither the one pair nor the two
pair of boots would have had any existence but for the
use which each of these men made of the social organism
by the exercise of their labour. Not to the social organism,
therefore, but to the exercise of their respective abilities,
must the existence of the boots be attributed. The social
organism is merely an opportunity which all must use for
the fructification of their eflTorts. The extent to which
each does use it depends upon his own capacity and
sentiments. The greater use any one makes of this
opportunity, the greater is the service which he renders to
Society. For Society to appropriate the result of the use
which any one makes of social opportunities is therefore
unjust and unwise. All that Society may and must do is,
to see that these social opportunities are equally open to
all, leaving to each the full reward which his use of such
opportunities may bring to him.
Moreover, the statement that Society is the only heir
to the inheritance of intellect and discovery, is only true
with regard to one of its parts. Intellect is a personal
attribute as much as speed, imagination, muscular strength,
or a good digestion. Like inteUect, all these faculties are
the result of the ancestral struggle for existence and con-
sequent better adjustment to the conditions of life. If
intellect is a social inheritance, all these other attributes, a
good digestion included, are also social inheritances. Yet,
like intellect, these faculties cannot be exercised by Society,
CH. V THE ETHICS OF DISTRIBUTION 225
but by their individual possessors alone. They, therefore,
are not social inheritances, in the only sense which such a
statement conveys, that they are common possessions to
which all are equally entitled. They are, on the contrary,
individual inheritances to which the individual alone can
claim a right, and which no one but the individual who
has inherited them can use.
If, on the other hand, the idea intended to be conveyed
is that the result of the exercise of intellect is a social
inheritance, the idea is negatived by the same considerations
which were found to invalidate the similar claim made with
regard to the result of ability and energy.
It is, however, different with discoveries. Discoveries,
inventions, and additions to knowledge are only temporarily
individual possessions, and ultimately become social posses-
sions and a social inheritance. The individual making
a discovery or invention, or acquiring a new know-
ledge, does so by utilising antecedent discoveries and know-
ledge, the accumulated product of all past generations.
We all stand on the shoulders of our predecessors ; can
reach higher than they could reach, because the knowledge
transmitted to us by them places us on a higher level.
This accumulated and transmitted knowledge, however, is
an opportunity open to all. The individual who, using
this common opportunity, makes a further discovery or
invention, or acquires additional knowledge, assumes no
greater freedom than any other possesses. The new
discovery, arising from the exercise of his individual
faculty upon an opportunity equally open to all, is the
exclusive and individual possession of the discoverer by the
law that every one shall experience the results of his own
acts. If he chooses to communicate the discovery, inven-
tion, or new knowledge to others, he is free to impose the
terms on which he will do so, and any use of the discovery,
invention, or knowledge by others, contrary to such terms,
is a breach of contract, an undue interference with the law
of equal freedom.
But just as all material products of labour ultimately
merge again in the general stock of matter, so all new
discoveries, inventions, and knowledge ultimately merge
Q
226 DEMOCRACY VERSUS SOCIALISM partiii
in the general fund of knowledge. The individual
having made the discovery or invention, or acquired the
new knowledge, must die, and with him would die the
result of his exertion unless it were adopted and preserved
by other men of the same generation and of succeeding
generations. The accumulation of discoveries and inven-
tions, the fund of knowledge which any society possesses,
is transmitted not by particular individuals to their
descendants, but by previous generations to the present
one, which in its turn will transmit it, enriched and
enlarged by the efforts of its members, to future genera-
tions. This fund, therefore, is a true social or common
inheritance. As such all are equally entitled to use it in
the only way in which it can be used, viz. acquiring it or
as much of it as they will or can by their own efforts as
one of the common opportunities for the maintenance of
life and the achievement of happiness. For this common
opportunity cannot be monopolised as other common
opportunities can, in the way that its acquisition by one
\inll prevent others from acquiring an equal share. On
the contrary, the more knowledge is acquired by any man,
and the greater the number of men who acquire the
fullest knowledge, the easier becomes the acquisition of
like knowledge by others. In every case, however, the
acquisition or knowledge can be achieved by individual
effort alone. While, therefore, knowledge is a social in-
heritance and possession, yet all men cannot be entitled
to equal knowledge, nor can knowledge be distributed
among them unequally. What all are entitled to, what it
is the duty of the State to bring about, is that all have an
equal opportunity for the acquisition of as much knowledge
as any of them may desire or can absorb.
Again it must be pointed out that the right of each to
an equal opportunity with all others for acquiring know-
ledge does not involve any common right in the products,
not even the material ones, which the acquisition of
superior knowledge enables its possessors to produce.
For knowledge, like intellect, ability, and energy, produces
nothing ; the application of knowledge alone leads to
material results. The product resulting from the appli-
cH.v THE ETHICS OF DISTRIBUTION 227
cation of superior knowledge, therefore, is in all respects
subject to the same considerations as the product resulting
from the exercise of superior intellect, ability, and energy ;
it is an individual possession to which Society can urge no
claims.
With the exception of the first, all the reasons adduced
in favour of social possession and equal distribution of
labour-products suffer from the same defect. They all
confuse the right of equal possession of desired things
with the right of equal opportunities to produce desired
things. The former is a spurious right, disregarding the
essential conditions of life ; the other is a true right,
emanating from and congruous xwith the essential con-
ditions of life. Ethics, therefore, utter the same condem-
nation of the distributive proposals of Socialism as we
found Economics to do, i.e. that they are opposed to and
destructive of the highest interests of mankind. Ethics
as well as Economics show that there is only one true and
beneficial system of distribution : the one which, founded
on justice, leaves in the possession of every individual all
the produce which the exercise of his faculties brings forth,
or which others freely surrender to him as a gift or in
return for services rendered to them, always provided
that no one is granted a greater share than others in the
common opportunities to produce or render services with-
out his making full compensation to these others for any
loss of opportunity which they may suffer in consequence.
CHAPTER VI
THE RIGHT TO THE USE OF THE EARTH
The dry superficial area of the earth being the only
medium through which external nature becomes accessible
to man ; being not merely his only foothold and resting-
place, but also the means through which he obtains access
to all the matter which he, through the exercise of his
faculties, changes into objects fit to satisfy his desires and
maintain his life, — it foUows that freedom to use the earth
is the indispensable condition for the exercise of man's
faculties and the maintenance of his life. Hence the
right to the use of the earth is a natural right, the
denial of which involves the denial of the right to the
exercise of any faculty, that is, the denial of the right to
live.
The right of any one to the exercise of his faculties
being limited only by the equal right of every one else,
the exercise of any faculty being dependent upon the use
of the earth, it follows that the right of any one to use
the earth is limited only by the equal right of every
one else. The natural right to the use of the earth,
therefore, is an equal right, inherent in all. If there
were only one man upon this earth he would obviously
be free to use the whole earth ; the right of any second
man to do the like must be equal to that of the
former. Nor can further multiplication bring about any
change in this relation. Of all the millions inhabiting the
earth to-day, each is free to use the whole earth or any
part of it, provided he infringes not the equal right of
any other man. And conversely, it is equally true that
cH.vi RIGHT TO USE OF THE EARTH 229
no one of them may so use the earth as to prevent any
other from similarly using it. For to do so implies a
claim to greater opportunities for the exercise of his
faculties than others can enjoy.
The earth, therefore, is the common property of all
men — the common property of all now living men,
subject to the equal rights of all succeeding generations.
For just as the human beings now living are dependent
upon the use of the earth for the exercise of their faculties
and the maintenance of their lives, so will succeeding
generations of men be dependent upon the same condition
for the maintenance of their lives. A baby which will be
born to-morrow or next year or a century hence, there-
fore, will have, in its turn, the same right to the use of
the earth as any one now inhabiting the earth. No
arrangements made, even with the consent of all living
men, can deprive any member of any future generation of
his or her equal rights to the use of the earth. Likewise
no arrangements made by past generations, even if all their
members had consented to them, can deprive any one now
living of his equal right. For every such arrangement, if
enforced, would offend against the law of equal freedom,
would deprive some of their right to an equal opportunity
for the exercise of their faculties and the maintenance of
their lives ; would run counter to the law, that each adult
shall experience the consequences of his own acts, and
would do all this at the dictation of some past generation,
making them the masters of all subsequent generations.
Justice, therefore, condemns private ownership of land.
For if one portion of the earth's surface, however small,
may justly be made private property, then all portions
may equally be made private property, and consequently
the whole earth may be made the private property of
some men. As private property of any portion of the
earth involves the right of exclusive use of such portion,
the private ownership of the whole earth likewise involves
the right of exclusive use of the whole earth. All non-
landowners, under this condition, would have no right to
the use of any part of the earth, would have no right to
live upon it. Being here on sufferance only, being
230 DEMOCRACY VERSUS SOCIALISM part in
dependent upon the permission of the landowners for an
opportunity to maintain their lives, the landowners may
deny them such permission without any infraction of
justice. As mere trespassers on the earth, the owners of
the earth may justly hunt them off the earth, i.e. condemn
them to immediate death. If, then, the whole earth can
justly be made private property — a proposition involved
in the claim that a part of it may be made private property
— the law of equal freedom is denied. For even iif the
owners of the earth were habitually to permit of its use by
all others, the latter would have no right to such use —
would be dependent upon such permission for the exercise
of their faculties and the maintenance of their lives.
Obviously, those who are dependent upon the permission
of others for the exercise of their faculties and the
continuance of their lives, cannot have equal freedom
with these others. On the contrary, the others are
absolute masters, and they are slaves without any rights.
Though the whole earth has not yet been made private
property, the most valuable parts of the earth have been
so appropriated. As a consequence vast numbers of
hvunan beings in every civilised country are deprived of
their equal right to the use of the earth, are dependent
upon the permission of others for the use of any op-
portunity to exercise their faculties and maintain their
lives. The conditions which would arise if the whole
earth were privately owned have actually arisen in civilised
countries through the private ownership of all the land of
such countries. For though elsewhere there is yet land
not privately owned, it is too distant or too little
productive to enable the majority of non-landowners to
escape from the conditions prevailing in their country.
In every civilised country the majority of the non-land-
owners, therefore, are deprived of their right to use their
faculties for the maintenance of their lives, while amongst
the landowners themselves there prevails the greatest
disparity of right. A few, owning more or less extensive
areas of valuable land, enjoy opportunities far in excess of
what equity could assign to them ; the majority, owning
small areas of little value, enjoy opportunities of less
cH.vi RIGHT TO USE OF THE EARTH 231
extent than equity would assign to them. What justice
requires, the recognition of the right of all to equal
opportunities for the exercise of their respective faculties, is
absolutely denied in all civilised countries.
This denial of justice, this abrogation of fundamental
rights, has arisen, exists, and continues to exist, not in
spite of the State, but through the direct action of the
State. As will be shown in the next chapter, the State, by
a consistent course of force and fraud, has created private
property in land, and now maintains it by force. Were it
not that police and soldiers are ready to enforce the claims
of private owners, the institution of private ownership
could not maintain itself. Men cultivating or otherwise
using the land would not for long continue to pay others
for the privilege of doing so, if the State did not force
them ; still less would men, seeking for an opportunity to
maintain their lives, allow vast areas of valuable land to
remain unused while they must starve.
The State, therefore, is not merely guilty of neglecting
one of its fundamental duties in allowing private property
in land to continue ; it commits the positive wrong of
maintaining this unjust condition. Yet, as it is the
primary duty of the State to maintain justice, to prevent
any infringement of the equal rights of all its members,
the State is bound to frame and enforce regulations which
will safeguard the equal right of every one of its members
to the use of the national land. Nor would it be difficult
so to do. The opportunity which any piece of land offers
for the exercise of faculties is measured by its value ; the
product of the exercise of faculties on any piece of land is
measured by the value of such produce minus the rental
value of such land. The land offering the least valuable
opportunity which must be used, having no rental value
under natural conditions, the rental value of all superior
land is the measure of the superior opportunity inhering
in it. The State, taking for common purposes the annual
rental value of all land, would equalise all natural op-
portunities and maintain the equal right of all to the use
of the land. All would have an equal opportunity to use
any part of the land, and those who obtained the privilege
232 DEMOCRACY VERSUS SOCIALISM part in
of using superior opportunities would pay full com-
pensation to all others for the special privilege accorded
to them.
An illustration will make this clear. A father leaves
to his three sons, in common, property consisting of three
houses of unequal value. Each of the sons wants to
inhabit one of the houses, and the question arises, how is
the common right of all three to be maintained while ac-
cording to each the use of a house. They decide the issue
in this way. Each of them makes an offer of what rent
he will pay for the use of one or more of the houses.
When the offers are compared, it is found that the
highest rent offered for the largest house is )^ 1 50, and is
made by the eldest. He, therefore, is accorded the use of
this house. The next eldest offers the higher rent for the
second house, jCioOy while the youngest son has offered a
rent of ^50 for the smallest house. They are, therefore,
granted the use of these respective houses. The rent for
the three houses, ^^300 in all, is placed in a common fund,
and is equally divided between the three, each of them
receiving jC^oo- Obviously this method safeguards the
equal right of all of them, without any interference with
the freedom of any.
That the equal right of all the members of the State
to the use of the land may be similarly safeguarded, that
such a system may be carried out without any interference
by the State with the individual use of land, and while
fully maintaining the individual ownership of any im-
provements placed on the land, will be fully shown in Part
v., when dealing with what is known as the Single Tax
proposal. For the present purpose it suffices to have
shown that justice cannot recognise any private property
in land, and imperatively demands that the State shall
restore to every one of its members his natural inherent
and equal right to the use of the earth.
CHAPTER VII
THE ETHICS OF PROPERTY
Th e sense of proprietorship exists to some extent in the
animal world. Squirrels and badgers have their hoards ;
dogs defend articles left in their charge, and bury bones
for future consumption ; and many animals, like the dogs
of Constantinople, resent the intrusion of members of their
own species into the quarters which they regard as their
own, or belonging to their special troop or herd. It is,
therefore, not surprising that a like sentiment exists even
among the most primitive of men, though in a similarly
rudimentary form.
The conditions of savage life cause the proprietary
sentiment to be indefinite and restricted. Deficient in
imagination, savage man has no adequate consciousness of
the future and its recurrent wants. The stimulus to in-
dustry, therefore, being weak, there goes with it a similarly
small development and consequent indefiniteness of the
proprietary sentiment. The low industrial development
causes this partially developed and indefinite sentiment to
be confined in extent. Beyond his arms and a few rude
appliances the savage has nothing that can be accumulated.
Under these circumstances he cannot have a clear or
extensive consciousness of individual possession. For, like
other sentiments, that of proprietorship depends for its
development upon the experience, continued through many
generations, of the gratifications which possession brings.
Where the conditions of life restrict these experiences the
sentiment must remain correspondingly weak.
Nevertheless, even amongst the lowest savages, indi-
234 DEMOCRACY VERSUS SOCIAUSM part iir
vidual property is claimed in arms, in personal decorations,
frequently consisting of relics of conquered enemies, and
in such appliances as minister to bodily wants and are
capable of repeated use. As we ascend in the scale, other
things, such as skins, huts, utensils, clothes, and others
similarly adapted to recurrent use, are seen to be private
property, while the hunting-ground, in which no individual
claims can be marked off, is regarded as the common pro-
perty of the horde or tribe.
When animals become domesticated and give rise to
pastoral life, and still more when agriculture is combined
with it, the field over which private possession can extend
is greatly enlarged. A further extension is made possible
when exchanges arise, first in the form of barter, and
subsequently in the more definite form of sale and
purchase.
This extension of the area of private proprietorship is
accompanied by a greater definiteness in the correlative
sentiment. During the hunting stage every member of
the horde helps himself freely to any game killed by one
or more individuals, though not infrequently the right of
the successful hunter to choice parts, skin and horns, is
recognised. No method of preserving meat being known,
and game being frequently too large to be consumed by one
family before it becomes unfit for use, this form of joint
proprietorship is imposed by natural conditions. Similarly
in the pastoral stage, the absence of money and market
values makes it impossible to assign to every member of
the patriarchal family and to its dependents such parts of
the produce of the herd or of the herd itself as is propor-
tionate to the labour expended by each. Hence all pro-
perty is centred in the hands of the patriarchal housefather,
who assigns to every member of the household as much of
it as he, guided by ancient custom, deems fitting.
When the patriarchal group settles down to agricultural
pursuits, reverence for ancient customs, strengthened by the
worship of ancestors whose commands are supposed to be
embodied in these customs, as well as the necessities of
mutual defence, combine to maintain the system of joint
production and joint consumption. Exposed to constant
CHAP. VII THE ETHICS OF PROPERTY 235
aggression, no individual, separated from his kindred,
would be able to maintain his life or keep any property.
Nevertheless, differentiation soon begins within the com-
munal group. Each person establishes individual owner-
ship in things on which he has expended separate labour,
in things which he has acquired in exchange for the pro-
ducts of his separate labour, and in things which his indi-
vidual prowess has won from an enemy. Nevertheless, the
greater part of every individual's exertion being directed,
in co-operation with those of others, towards common
production, the principal product of each individual's
labour is enjoyed in common with these others. Compen-
sation for injury suffered by any member of the group is
similarly a joint possession of all those who are under the
obligation of the blood-feud, though there can be little
doubt that, when the character of the things given in com-
pensation allowed of it, they were generally divided among
the members of the group.
As soon, however, as greater external safety makes the
shelter of the family group of less importance, while grow-
ing commercial intercourse and increasing differentiation
of pursuits multiply the opportunities for acquiring indi-
vidual possessions, an external differentiation begins. For
the communal system bore within it from the first a cause
of dissolution ready to operate as soon as the conditions of
life allowed of it. The more restless and independent of
its members must always have chafed at the restrictions
placed on their activities, while the more industrious and
skilful must have felt the injustice of the idle and unskilful
taking equal shares with themselves. These, therefore,
avail themselves sooner or later of favourable conditions
which enable them to leave the house or village community,
which ultimately dissolves and divides its property amongst
its members. Private ownership begins thus gradually to
supplant joint ownership in all the products of labour as
soon as the conditions which impose joint ownership are
withdrawn. Each individual claims full and exclusive
possession and property in the produce of his own exer-
tions, in obedience to the law, that each adult shall experi-
ence all the consequences of his own acts.
236 DEMOCRACY VERSUS SOCIALISM part hi
The origin of proprietary rights in things which are
not the produce of labour must now be alluded to. The
primitive savage, in whom the sentiment of justice is as
yet but little developed, regards his wife and children as
his absolute and exclusive property. He may kill them or
sell them into slavery without fear of incurring the dis-
approval of his fellows. Reverence for ancient customs,
ancestor worship, and the acquisition of wives by purchase
or capture tend to prolong this subjection, so that it is
found even in comparatively civilised communities, such
as China.
As the greater physical strength of the male leads to
the establishment of proprietary rights in women and
children, so greater prowess in war establishes property
rights over the persons and possessions of conquered
enemies. Though there are some contributory causes of
later origin, war is the primary as well as the more general
cause of property in slaves and of private property in land.
In the absence of any greater industrial development
than is possible during the hunting stage slaves are almost
useless, and, where game is scarce, a disadvantage.
Savages, therefore, rarely make slaves of their captives ;
they either kill and eat them, or, in rare cases, adopt them
into the tribe. Slavery gradually supplants cannibalism as
the pastoral and agricultural stages are reached, and, finally,
becomes a settled institution. For tribes who use their
captives as producers, while their men are all warriors,
have a great advantage over tribes which, killing their
captives, can only bring a part of their men into the field.
The conquest and displacement of the more savage and
ferocious by less savage and ferocious tribes has thus been
furthered by slavery.
As, however, decrease of military activity, lessening the
number of deaths by violence, leads to an increase in the
number of native men, while at the same time the slave-
class is less frequently increased by fresh captives, some of
the free population must take part in industrial activities.
When, through private ownership of land, free labourers
become disassociated from the soil and are forced to sell
their labour to others for little more than sustenance.
CHAP. VII THE ETHICS OF PROPERTY 237
slavery tends to disappear. For in the competition between
free labour and slave labour the latter is invariably found
to be the weaker. In relative interest, intelligence, and
energy the free labourer is far superior to the slave
labourer, and, therefore, the more profitable productive
agent. This economic cause, tending to produce the dis-
appearance of slavery, is ultimately assisted by the
developed sentiment of justice in causing the abolition of
slavery, even where, as in domestic service, the economic
cause, by itself, would not be active.
In the hunting as well as in the pastoral stage the
participation in the use of the land must be a joint partici-
pation. The hunter must be free to follow his game, and
herds must be driven from place to place as the seasons
and the state of grass and water dictate. When, with the
agricultural stage, the individual use of particular areas
of land becomes possible, many circumstances delay its
adoption. Traditional usage, sanctified by ancestor
worship, has formed sentiments inimical to change.
Impossibility to fence off large areas plays a restraining
part, and the absence of any knowledge of manures com-
pels the frequent shifting of cultivated areas through
exhaustion of the soil.
Hence, throughout long stages, land is not only owned
jointly by the family, village, or tribe, but it is even used
jointly. Even when joint use of agricultural land is
abandoned, and when, through greater fixity of structure,
a house lot is used for a long time by the same family,
this individual use of land fails to establish individual
ownership. As soon as the crop is taken oflF, or planted
trees have died, or the house disappears, the land reverts
to the community, and agricultural land is subject to re-
allotment at more or less regular periods. As a typical
example, the Teutonic mark may be alluded to. The
territory was owned jointly by the whole clan, composed
of kindred families, every freeman having the right of use
to some arable land, as well as to meadows, pastures, and
wood. All but the arable land was used in common, and
the latter reverted to the same condition as soon as the
crop was taken oflF, being then used as common grazing
238 DEMOCRACY VERSUS SOCIALISM part in
land. Thus the right of each adult male member of the
clan or village, permanent only as regards the actual home-
stead, was for the rest of the nature of a usufruct only,
the ownership of all the land being vested in the collective
body of free men.
Wherever common ownership of the land has termi-
nated, force, either internal or external, has been the cause.
Invasion and conquest give unlimited possession of the
person and property of the conquered. Along with other
spoils of war the land becomes a spoil, being henceforth
owned by the conquering leader, chief, or king, and
partly allotted by him to his followers, on conditions
which, more or less effectively, preserve his supremacy.
Similarly, long-continued resistance to invasion, giving
rise to those class distinctions which always accompany the
militant state, enables the more powerful to appropriate
part of the common property. The personal subordina-
tion, necessary in war, becomes permanent where warfare
is chronic, and produces sentiments which lead to acquies-
cence in aggressions upon the common property. Such
aggression, at first spasmodic, is converted into a State
policy when the interests of the king induce him to
endeavour to break up the village or dan organisation of
society.*
Conquest and internal aggression are thus, everywhere,
the causes of slavery and or the individual ownership of
land. The private ownership of land, established by
militancy, is, however, incomplete. Qualified in one
direction by the right of the suzerain to customary services
by the landholders, it is qualified in the opposite direc-
tion by the rights of sub-tenants and serfs to a share in
the produce of the soil. In both directions a rent-charge
^ *' The great landowner it the creature of the State ; the village group of &rmert is
not. The individual proprietor of a vast domain cannot maintain his position unless he
can obtain the power^l assistance of the State Courts and the strong support of the
militarv power. His interests conflict too evidently with the interests of those who
serve him, and without whose labour his domain would be worthless. He is the
favourite of the State, and every step of State progress is marked by a corresponding in-
crease in his ranks. When the State extends its conquests into hostile lands it plants
its faithful soldiers as landowners on the conquered soil. When it annexes the domains
of the Church it distributes them among a new territorial aristocracy. When it finally
breaks the power of the clan it converts the clan chief into a landlord. On the other
hand, the clan and the household are older than the State, and utterly opposed to it in
principle.** — ^Jenks, Law and Politia during the Middle Aget, pp. 162, 163.
CHAP. VII THE ETHICS OF PROPERTY 239
limits the ownership of the tenant-in-chief ; that due to
the suzerain being used, more or less faithfully, for
common objects ; that due to the sub-tenants and serfs
being used for their private objects. Growing industrial-
ism and decline of militarism afford the opportunity to
the landholders, who, as the ruling class, are also either
actual legislators or possessed of the greatest influence
over legislators, to get rid of both limitations. Military
obligations are at first exchanged for a money rent, for
which, subsequently, a tax on the whole people is substi-
tuted. With the decline and ultimate disappearance of
serfdom, and the substitution of money rent for obligations
of service, the qualified rights of the sub-tenants and
former serfs become obscured and ultimately terminate.
The rent, at first fixed with due r^ard to their rights in
the soil, is gradually increased as these rights fade from
view, until at last, absorbing the value of such rights, it is
equal, or even in excess, of the full value of the land.
The absolute ownership of land by individuals, now
existing, therefore, is a comparatively late development,
having its root in conquest, force, or fraud.
Both the ownership of slaves and the private ownership
of land thus stand on a different basis, and derive their
existence from a different cause than the ownership of the
products of labour.^
^ ** In the first place property in land it, in our opinion, the only form which serves
as an instrument of control. ' Property ' in movable goods should be distinguished from
* property ' in immovable goods. What is there in common between the unlimited
possession and free disposal of chattels and that juridical relation, in virtue of which a
person may keep a piece of land exclusively for his own benefit ? Yet for these funda-
mentally different conceptions the European languages uae but one term, with conse-
quent indistinctness and confusion of ideas in science.
" Common property {E^aitwH, frofrium) is a contradiction in terms ; yet even
separate or private *■ property ' has been discussed as a simple concept, and what might
be true of property in movable goods has been applied without distinction to property in
land, a very different thing. This is certainly a great mistake.
" To justify private property as the natural right of the individual to the fruit of his
own exertions sufficiently explains property in movable goods, including the product of
the land which a man's own labour has tilled, bat does not explain property in land or
in the fruit of another's labour ; while to trace its origin to the actual possession of
weapons, ornaments, etc., an attempt which Dargun has recently renewed, leaves a gap
between movable goods and immovable which no analogy can bridge over, for they are
totally different. No doubt individual property in movable goods has always existed,
for the conditions of human life require it. But the conditions of property in land are
quite different. Land is not the product of human labour, and its use is temporary ; it
can be occupied, detained, or possessed only in a limited and figurative sense ; it might
be possible to defend a small portion of land against trespassers ; but it wotdd be im-
240 DEMOCRACY VERSUS SOCIALISM part hi
It is the same with monopolies. Every monopoly
created by the State, as has been shown, has for its basis a
special privilege jgranted to some, which cannot be equally
granted to all. The possession of such privileges gives
to their possessors a twofold advantage over others. It
gives to them a greater opportunity to exercise their
faculties, greater freedom than others can enjoy ; and it
enables them to appropriate wealth produced by others
without rendering equivalent service in return.
The distribution of wealth being an assignment of
ownership, the principles which determine the distribution
of wealth must also determine proprietary rights. These
principles we found to be that aU the members of the
State are entitled to full and equal opportunities for
exercising their faculties in the production of wealth, and
that each is entitled to full proprietary rights in all things
that his exertions produce. All forms of wealth being
the joint product of labour and of external matter, rights
of property must be governed by a combination of the
laws governing individual exertion and the use of the
earth. Labour, therefore, can give no right to wealth
which is derived from a better natural opportunity than
others are permitted to use. No man having a better
right than any others to the use of the earth, the rights of
all to use the earth are equal. Whatever wealth any
man's labour extracts from natural opportunities which no
one else wants, belongs to him and to him alone. But if
more than one desires to use any part of land — that is, if
the land have any value — the one who receives the privilege
of using it must compensate all others for the special
privilege accorded to him. For that any part of land is
desired by more than one man, that it has a value, proves
that it affords a better opportunity for making wealth, or
confers some other advantage greater than is open to all.
Society as a whole, therefore, is entitled to that part of
possible to defend the larger tracts, which alone are under consideration here. Property
in land is not a physical fact, and cannot be explained by physical facts— occupation,
labour, etc. To say that land is occupied or possessed, as is currently done, is to use a
metaphor or a legal fiction. Land, by its nature, admits of only one relation to man,
the enjoyment of its use, the common enjoyment of many." — ^Ludwig Gumplowicz,
TAe Outlines of Sociology^ pp. 114, X15.
CHAP. VII THE ETHICS OF PROPERTY 241
individual labour-prcxiucts which is due to the better
natural opportunities used by any of its members, while
each member has full proprietary rights in all that part of
the produce of his labour which the same exertion would
have produced if applied to the least productive oppor-
tunity which must be used by some men. The one is
rent, a common property, to which all are entitled equally ;
the other is the product of individual exertion, to which
each is entitled individually.
It foUows that property in slaves, in land, and in
monopolies is in reality an infringement of the right of
property. For just as slavery deprives the slave of his
individual property, so does the private ownership of land,
giving to a few the rent which equally belongs to all,
deprive the majority of men of their common property,
and so does the private ownership of monopolies deprive
all other men either of a part of the one or of a part of
the other.
In addition to this direct infringement of " the sanctity
of property," private ownership of land involves indirect
infringements as well. These have been set forth in
Part II. chapter viii., but the importance of one of
them justifies its further exposition. The appropriation
by the landlords of the common or social property com-
pels the State to deprive its members of their individual
property. In guarding the natural rights of its members,
and performing the duties consequent thereon, the State
incurs expenses. These expenses increase with every
addition to the population, and with every increase in
social integration and differentiation. This social growth,
however, adds to the common fund, the rental value of
land, out of which these common expenses can be met, by
far more than it increases the necessary and legitimate
expenditure. When, however, this common fund is ap-
propriated by individuals, the expenses of the State must
be met in other ways. That way is taxation, i.e. the
State now deprives all its members of part of their indi-
vidual property. The State having, by its own act,
handed to individuals the common property of all, now
infringes upon the individual property of each of its
R
242 DEMOCRACY VERSUS SOCIALISM partiii
members. To the theft of the common property, the
theft of individual property is added.
The object of the State, the fuller ensurance of the
equal rights of all its members, is defeated by the habitual
curtailment of any of these rights. Nevertheless, occasions
may arise when some or all rights must be temporarily
curtailed, in order to ensure their permanent recognition.
Such necessity may arise from external aggression. When
the existence of the State itself is threatened, the State
may, in so far as appears necessary, call upon all its
members to risk their lives in defence of the common
rights. Property being less important than life itself, the
right to property is of inferior importance to the right
to life — the State has still less cause to abstain from in-
fringing the right to property. For purposes of defensive
war, therefore, when the common property is insufficient
to meet the necessary expenditure, individual property
may be appropriated by the State, provided that the
sacrifice of time, health, life, and property which the
members of the State are called upon to make is in some
manner equalised. Taxation of individual wealth, un-
justifiable as an habitual measure in time of peace, may,
therefore, become justifiable as a temporary measure for
purposes of defensive war.
The false notions of proprietary rights engendered by
the existing systems of monopoly have obscured even this
truth. While some States rely upon voluntary enlistment
even in time of war, others habitually practise compulsion,
and in none is the right of the State to compel its members
to sacrifice their lives in the common defence questioned.
While thus claiming the right to infringe, or actually
infringing, the equal right to life of some of its members,
the State does not generally expect, nor compel a similar
sacrifice of property. Instead of calling upon the owners
of accumulated property to furnish the funds necessary
for defence, the State generally borrows such funds from
them, repaying them with interest out of the proceeds of
taxation, which mainly falls, not on accumulated prof)erty,
but on the labour of those classes which have borne the
major part of the sacrifice of time, health, and life. The
CHAP. VII THE ETHICS OF PROPERTY 243
masses of the people, from whom the bulk of the active
defenders are drawn, are thus compelled to sacrifice the
produce of their labour as well ; while the owners of
accumulated property, who generally take no part in the
actual defence, sacrifice little or no property, and fre-
quently receive back, apart from interest, a greater amount
of wealth than they have lent to the State.
Property in things not produced by labour is a direct
denial of the only true right of property, that in things
produced by labour. All these forms of property — slavery,
private ownership of land and of monopolies — are so many
endeavours to enable some to live without labour, by the
forcible appropriation of the produce of others' labour.
Being, therefore, an infringement of the law of equal
freedom, as also of the law that every adult shall experi-
ence the consequences of his own acts, they have no
ethical basis, and are contrary to justice. Not till all
these forms of invasion of property rights are abolished
does the true right of property prevail. Nor can it
prevail under Socialism. For Socialism also invades the
valid individual property rights of many of its members,
of all those who are more able and industrious, by handing
over to the less able and industrious a part of the property
of the former. For the injustice now prevailing it pro-
poses to substitute another mjustice, and must, tiierefore,
perpetuate, though probably in slightly different forms,
the evils now existing.
CHAPTER VIII
THE RIGHT OF FREE INDUSTRY
The law of equal freedom has, as a necessary corollary,
that every one shall be free to exercise such of his faculties
as he pleases, and in such times, places, and manner as to
him seems best, provided his resulting activities do not
infringe the equal rights of others. Justice, therefore,
cannot recognise any limitation upon or interference with
the industrial and professional activities of men other than
is necessary for the maintenance of equal freedom. Any
action by the State or by individuals in this direction is an
infringement of the right of equal freedom. " The right to
labour," therefore, is a natural right, not in the sense in
which Socialism uses the term, that the State shall provide
work for all its members, but in the sense that it is the
duty of the State to prevent an equal opportunity for
work being denied to any one, and to abstain from inter-
ference with the amount, kind, and manner of work which
any one elects to do.
Socialism, by entrusting the conduct of industries to
the State, proposes to abolish this natural right, and
thereby, depriving all or nearly all of freedom, would
establish a virtual condition of slavery.
Slavery has existed under many and widely varying
forms. The difference is great between the mild and
patriarchal system of slavery as it existed in many pastoral
tribes and now exists in Turkey, and that which, arising
when slaves are bought and sold, leads to their treatment
as mere working animals without any rights, such as
existed in Rome and in the southern states of America.
CHAP. VIII RIGHT OF FREE INDUSTRY 245
Serfdom, the form of slavery arising from conquest, like-
wise exhibits widely different forms of severity, extending
all the way from the mild form which it had assumed in
Russia on the eve of its abolition to the extreme degrada-
tion of the Peruvians after the Spanish conquest.
What is it that, nevertheless, enables us to recognise all
those widely varying conditions as states of slavery ? In
other words, which are the essential features which dis-
tinguish slavery from freedom ? There are two and only
two. One is the right of the owner to determine the
time, place, and direction in which the slave shall exercise
his industrial faculties ; the other is the right of the owner
to appropriate part or all of the product of the slave's
labour. These two conditions, being the persistent con-
comitants of slavery from its mildest to its most severe
forms, are the essential conditions of slavery. Where they
exist slavery exists, and the question who inflicts the
slavery, who is the owner, does not aflFect the issue.
Slavery, therefore, may arise from subjection to one in-
dividual, or to an organised body of many individuals, the
State — from the subjection of an insignificant minority or
of an absolute majority ; may be imposed by force or
voluntarily assumed. The industrial proposals of Socialism,
involving, as has been shown,^ the determination by State
officials of the time and place in which each member of the
State shall carry on his industrial activities, as also what
shall be the nature of the activities which each shall carry
on, obviously deprive all of them of freedom and establish
with regard to all one of the essential conditions of slavery.
The distributive proposal of Socialism, depriving the more
able and industrious members of the community of a part
of the result of their labour, establishes, as far as they
are concerned, the second essential condition of slavery.
Socialism thus will inflict full slavery on many while in-
flicting partial slavery on nearly all the members of society.
Its industrial proposals, therefore, again disregard the
essential natural rights, the right of each to the freest
and fullest exercise of all his faculties, limited only by the
equal right of all others. Socialism, therefore, must reduce
^ Part I. chaps, ii. and iii.
246 DEMOCRACY VERSUS SOCIALISM partiii
the aggregate sum of happiness because it disregards the
conditions which alone can secure the greatest sum of
happiness.
While the law of equal freedom thus forbids the
conduct of industries in general by the State, it imposes
upon the State either the conduct of particular industries
or participation in their results. Such industries are all
those which cannot be undertaken by an individual or
body of individuals without a special privilege given by
the State, a privilege which cannot be granted equally to
all others. For the grant of such special privileges to
some is in itself an infringement of the law of equal
freedom, unless all have an equal opportunity of acquiring
them, and unless those who are successful give full com-
pensation to all others for the special privilege accorded
to them. The same principle, therefore, which imposes
upon the State abstinence from interference with industrial
activities in which all can engage, also enforces upon the
State the duty to conduct, or to frame equitable regula-
tions for the conduct of, industries which rest upon special
privileges.
Such industries, having been fully described,^ need not
be recapitulated here in detail. Suffice it to say that, con-
sisting of railways, canals, tramways, roads, and bridges, as
well as of the supply of water, gas, electricity, hydraulic
and pneumatic power, all of them are dependent upon the
grant of special privileges to the use of a continuous track
of land of exceptionally high value. Involving the use of
a specially valuable opportunity under a special privilege,
it is an infringement of the right of equal fre^om and
equal opportunities to grant such privileges without
adequately safeguarding the equal right of all others.
Either such industries must be conducted by society itself
for the equal benefit of all its members, or society when
granting such privileges must attach to them conditions
compelling the grantees to pay to the commimity the full
annual value which such privilege may at any time possess,
i.e. the full rental value of the land used for the special
purpose in question. Which of these two courses is more
^ Part II. chapt. iv. and v.
CHAP. VIII RIGHT OF FREE INDUSTRY 247
advantageous depends upon special circumstances ; but the
adoption of either would manifestly prevent the infraction
of the law of equal freedom involved in the grant of more
advantageous opportunities to some than others can enjoy.
The ethical line of demarcation between the industries
which are beyond the interference of the State and those
which are subject to the control of the State, thus coincides
with the economic line of demarcation as drawn in Book II.
chaps, iv. and v. Ethics as well as economics condemn
the socialistic claim that all industries may rightfully be
withdrawn from individual control and placed under
collective control, just as they condemn the claim that all
industries may rightfully be exempted from social control ;
enforce the claim that, while it is the duty of society to
control those industries which involve the grant of special
privileges, it is equally its duty to abstain from interference
with industries for the conduct of which no special privilege
is required.
Two objections may be raised against this conclusion.
One is that non-interference by the State with unprivileged
industries involves the abstention from punishing fraudu-
lent promises and adulterations. The reply is, that both
fraudulent promises and adulterations are breaches of con-
tract, and, therefore, infringement of the law of equal
freedom. In either case one party to the contract has
failed to perform the service contracted for, while the
other has done so. One, therefore, has assumed greater
freedom than the other, has broken the law of equal
freedom ; and interference by the State, therefore, is not
only justified but entailed by the same law which forbids
general interference.
The other objection is, that the doctrine of non-
interference involves the condemnation of factory legis-
lation, such as the limitations placed upon working hours,
the sanitary supervision of workshops, the enforcement of
precautions against accidents. In one sense the validity of
this objection must be admitted. For, however necessary
and beneficial such legislation may be as a palliative of
preceding injustice, it is nevertheless unjust in itself. The
necessity for such interference with equal freedom arises
248 DEMOCRACY VERSUS SOCIALISM partiii
from antecedent interferences with the law of equal
freedom. The State, in various ways, having given ex-
cessive power to capitalists by infringing upon the equal
rights of the majority, has destroyed the power of the
masses of the people to resist oppression, and is now com-
pelled to place still further restraints upon freedom in
order to reduce oppression.
Those who oppose such irrational remedies while de-
fending the unjust conditions which give them temporary
value are themselves acting irrationally. Nevertheless is
it true that such limitations placed upon the freedom of
workmen and capitalists alike, in order to counteract the
excessive power acquired by capitalists, are unjust, and
unable to permanently and completely remedy the evils
which have caused their adoption. Such complete and
permanent remedy can only be found in the restoration of
equal freedom to all, which, restoring independence to the
masses, would destroy the excessive power of capitalists,
and therefore make unnecessary any limitation of it.
Under conditions such as would arise from the recognition
of justice, all having free and equal access to natural as
well as to social opportunities, the competition between
employers for workers would be as great as, or greater
than, that between workers for employment. The workers
being really, and not merely nominally, free to accept or
decline employment, would themselves be able to insist
upon proper conditions of employment. Just as now
there is no necessity to interfere with the freedom of
English duchesses or of the wives of American millionaires,
to prevent them from working an undue number of hours
and compelling their children to do so, so there would
be no necessity to so interfere with the freedom of other
women and children if they were really free. That
necessity exists to-day because the negation of their equal
right to the natursi and social opportunities for the
exercise of their faculties makes workers dependent upon
the will of employers and robs them of the result of their
labour. When these equal rights are restored to the
masses of the people, when they can retain for their own
use the wealth which their labour creates, men will not
CHAP. VIII RIGHT OF FREE INDUSTRY 249
consent to work under needlessly insanitary or dangerous
conditions, nor will they compel wives and children to
work prematurely and excessively. Even if there are
some in which the sympathetic feelings are too dormant
to restrain such selfish actions, the absence of the general
custom of woman and child labour in factories would be a
sufficient bar to their being put into practice.
The limitations on equal and full freedom embodied
in such factory legislation, being made necessary by ante-
cedent limitations of freedom, become unnecessary when
these antecedent interferences are abolished. While they
may be justified in the present pathological state of society,
they cannot be justified when, through the establishment of
justice, a physiological state of society has been achieved.
^
CHAPTER IX
INDIVIDUALISM
The poverty of the masses of the people, as well as all
other social and industrial evils which disgrace our civili-
sation, are attributed by socialists to an alleged "rampant
individualism." Individualism, they teach, superseded the
comparatively beneficent, though primitive, mediaeval
Socialism, and, substituting the will of the individual for
the reign of State law, culminated in the degradation of
the masses of the people, and the oppression practised by
employers during the second half of the eighteenth and the
first quarter of the nineteenth century. Its excesses have
been curtailed since, and some slight alleviation of social
injustice has been achieved by a partial return to Socialism,
i.e. by the enactment of laws limiting individual freedom
both of employers and employed, such as Factory Acts,
Mines Regulation Acts, and others. A perusal of the
essays *' Historic " and " Transition to Social Democracy "
in Fabian Essays clearly yields the above results. The
following quotations are from the former of these two.
On page 30 it is stated : —
" The record of the century in English social history
begins with the trial and hopeless failure of an almost
complete industrial individualism."
On page 60 this allegation is repeated in similar
form : —
" With the masses painfully conscious of the failure of
individualism to create a decent social life for four-fifths
of the people, it might have been foreseen that indi-
vidualism could not survive their advent to power."
CHAP. IX INDIVIDUALISM 251
This allegation, that " almost complete individualism "
was the condition recently existing and, but slightly modi-
fied, continuing at the present time ; that Individualism
is responsible, actively or passively, for existing social
injustice and the degradation of the masses of the people,
is repeated ad nauseam throughout the literature of
Socialism, and forms the burden of its popular lectures.
The conclusion invariably drawn is, that the failure of
Individualism compels the adoption of the only alterna-
tive system. Socialism. This antithesis imposes on many
besides the unthinking, yet it is based on a misconception
of the existing system. Individualism, as a social organi-
sation, has not so far had a trial, because it has not yet
existed. Advance there has been from the primitive
Socialism of earlier times, in the direction of Individual-
ism ; — an advance which has largely substituted voluntary
co-operation for compulsory co-operation ; which has
freed industrial activities from the minute supervision of
State officials ; and has substituted a partial recognition
of individual rights for their total denial. But Indi-
vidualism, the full freedom of each individual, limited only
by the equal freedom of all others, has never yet been
reached, and the social injustice now prevailing exists,
not on account, nor in spite, of Individualism, but through
limitations of Individualism imposed or acquiesced in by
the State.
Social evolution in the past exhibits a concurrent course
of political and industrial emancipation. The political
ascendency of chiefs among savage and barbarian tribes
is accompanied by their industrial ascendency. Industrial
operations are carried on under their directions ; the
political authority controls the industrial activities of the
community, supervises or monopolises exchanges with
other tribes, and fixes prices. In many, somewhat more
advanced, communities, the agency exercising this indus-
trial control is to some extent separated from that exer-
cising political control. Special " trading-chiefs " evolve,
who direct the industry and trade of the society. Still
later, the " trading-chief*' evolves into the government
officer, selling permission to produce, superintending culti-
252 DEMOCRACY VERSUS SOCIALISM partiii
vation, fixing markets and prices, grading goods, and
generally exercising strict supervision over all industrial
activities.
In France, during the feudal period, the territorial
nobles, lay and clericd, being the political heads, exercised
control and supervision over the industrial activities of
the cultivators and artisans, of the slave and the serf, and
even the partially free classes. Apart from such direct
control as was exercised by their bailiffs over the culti-
vators and others engaged on their estates, apart also
from the industrial monopolies which they reserved to
themselves, they sold industrial and commercial licences.
This system was continued by the State, when the sub-
sequent growth of the royal power concentrated the
government, to such an extent that it became a legal
maxim that " the right to labour is a royal right, which
the prince may sell and subjects can buy." Organised on
a comprehensive basis by Colbert, the authorisation of
occupations, dictation of industrial processes, examination
of products, and their destruction if not approved of by
State officials, lasted down to the Revolution.
England, Germany, and the Low Countries, besides
exhibiting similar features of control by the central
political authority, show a specially great development
of industrial control by local political authorities. The
heads of guilds were identical with the local political
heads, and the guilds themselves were partly political
bodies taking part in municipal government. The guilds,
in their political capacity, restricted the right to labour at
their respective occupations to their own members ; ad-
mission was sold for money-payments and services. In-
fractions of the monopoly of the guild were punished by
fines and other penalties, and the guild-master dictated
processes, controlled production, and examined products.
Purchases and bargains were made in the presence of
officials, and manufacturing processes were controlled by
law.
Social evolution in the field of industry, therefore, as
well as elsewhere, has been from a primitive Socialism in
the direction of Individualism. The advance made in this
CHAP. IX INDIVIDUALISM 253
particular sphere has been great, but its beneficial effects,
great and obvious as they are, have been counteracted by
the persistence of restrictions in other directions.
The inquiry pursued in the preceding chapters has
shown the contrasting characters of Individualism and
Socialism. The essential ethical difference between these
two systems of social organisation we saw to be as follows : —
Socialism, denying the existence of individual, natural
rights, seeks to reconstruct society in a direction opposite
to its past evolution ; to make the individual absolutely
subservient to the State ; to deprive him of his equal right
with all others of exercising his industrial faculties as he
will, and to compel him to exercise them in such manner,
time, and place as he is directed ; to annul his right to
benefit by his own beneficial acts ; and to allot him a reward
bearing no reference to the service rendered by him.
Individualism, affirming the existence of equal, natural,
individual rights, seeks the further evolution of society
in the direction of its past evolution until society
shall have become fully subservient to the welfere of the
individuals composing it ; seeking to attain such general
welfare through the removal of the remaining infractions
of the natural and equal rights of all individuals — " the
freedom of each to exercise all his faculties as he wills,
provided he infringes not the equal freedom of any
other " ; the right of each to the fullest opportunities for
the exercise of his faculties, limited only by the equal
right of all others ; and the unlimited right of each to
benefit by his own beneficial acts, reward being propor-
tioned to service rendered.
The prevailing condition of the vast majority of every
people, so far from being that at which Individualism aims,
is practically identical with that which Socialism proposes
to make general. They are not free to choose their occu-
pations, because in the one direction private ownership of
land, in the other the cost of a smtable education, closes
many occupations to the masses of the people ; they have
no full and equal opportunity, frequently no opportunity
at all, for the exercise of all their faculties, for the same
reasons ; and private ownership of land and monopolies
254 DEMOCRACY VERSUS SOCIALISM part hi
deprives them of the beneficial results of their acts, and
reduces their reward to below the value of the services
which they render. Individual freedom exists, but, far
from being equal and general, it is confined to a small
minority of every people, to whom the rest have been sub-
jected and made tributary by organised society — the State.
Organised society having established these infractions of
equal rights, likewise now maintains them, and it is, there-
fore, social action, the unjust action of the State, which is
responsible for the evils which flow from them. Not
such approach to Individualism as has arisen in the slow
evolution of social organisation, but the survival of
primitive Socialism, is the cause of existing social injustice.
Individualism, regarding the State as a means towards
an end ; holding that end to be, not the greatest happi-
ness of the greatest number, but the greatest possible
happiness of all the members of the State ; holding further
that this end can be subserved by the State in no other way
than by the maintenance of " the freedom of every one
to do all he wills, provided he infringes not the equal free-
dom of any other," — accuses the State of sins of omission
as well as of sins of commission. Interfering where its
interference infringes upon the equal rights of all, the
State fails to interfere where such interference is necessary
to maintain the equal rights of all. It fails to carry on
some of the industries which rest upon special privileges,
and to procure adequate compensation for the conmiunity
with regard to others ; it fails to establish equal oppor-
tunities of justice by making judicial trials free of charge ;
it fails to procure equal opportunities for the acquisition
of knowledge by making education free in all its branches ;
in these and in hundreds of minor ways the State has so
far failed to assume the functions incumbent on it for the
maintenance of equal rights and freedom, while in many
other ways, the most important of which alone have been
examined, it has assumed functions which unjustly curtail
individual freedom and establish inequality of rights.
Social injustice, therefore, prevails, not on account,
nor in spite, of Individualism, but through the absence of
Individualism, through the active and passive disregard of
CHAP. IX INDIVIDUALISM 255
equal individual freedom by the State. The removal of
social injustice, therefore, is not to be obtained by still
further interference with equal individual freedom, and
still less by the abolition of individual freedom which
Socialism contemplates ; it can be obtained only by the
removal of all interference with individual freedom which
exceeds that necessary for the maintenance of equal free-
dom for all.
This conclusion is not invalidated by the admission that
remedial measures involving further restrictions of indivi-
dual freedom, such as those already alluded to, may have
had beneficial results. For if State limitations of indi-
vidual and equal fi-eedom have deprived the majority of
the people of independence and power to resist capitalistic
oppression, as they have done and are still doing, restric-
tions placed upon the oppressors, otherwise unnecessary,
may to some extent alleviate the oppression. Neverthe-
less it is clear that such consequential interferences would
be unnecessary if, through the removal of the original
interferences, the balance of power were restored. At
their best, moreover, they are merely attempts to alleviate
symptoms without touching the cause of social disease.
A true view of social conditions and their causes, how-
ever, cannot be obtained by the examination of existing
causes alone ; past causes also must be taken into account.
For in the evolution of social life, as in the evolution of
life in general, results do not disappear with their causes,
but persist beyond them, and may, in their turn, become
causes of further results. The hereditary character of the
race under the influence of external conditions produces
its customs and laws ; but these laws and customs in their
turn modify character and conditions. Past infringements
of equal freedom, therefore, join existing infringements, as
still active causes of social injustice. Let us then glance
at some of these past actions of the State in Great Britain,
which, though now discontinued, have contributed to the
existing degradation of the masses of the people in the
mother country and in her colonies.
The origin of the modern machine industry is contem-
poraneous with the state of greatest degradation of the
256 DEMOCRACY VERSUS SOCIAUSM partiii
working classes in Great Britain. For 400 years and more
the State, in which first the great landowners and subse-
quently landowners and great capitalists held the dominant
position, had been engaged in undermining the industrial
independence of the peasant and artisan class, through the
confiscation of their individual and collective property in
the soil and of their trade-funds ; through depressing their
wages and increasing the price of the necessaries and
comforts of life ; through prohibiting their freedom of
movement and combination.
Professor Thorold Rogers states : —
** The pauperism and the degradation of the English
labourer were the result of a series of Acts of Parliament
and acts of government, which were designed or adopted
with the express purpose of compelling the labourer to
work at the lowest rates of wages possible, and which
succeeded at last in that purpose." ^
And also : —
"I contend that from 1563 to 1824 a conspiracy,
concocted by the law and carried out by parties interested
in its success, was entered into to cheat the English work-
man of his wages, to tie him to the soil, to deprive him of
hope, and to degrade him into irremediable poverty. . . .
For more than two centuries and a half the English law,
and those who administered the law, were engaged in
grinding the English workman down to the lowest pittance,
in stamping down every expression or act which indicated
any organised discontent, and in multiplying penalties upon
him when he thought of his natural rights." *
An enumeration of a few only of the principal measures
designed to deprive the labouring classes of their rights,
and to degrade them to virtual slavery, will show that
these indignant statements are warranted by fact.
The right to accumulate land xmder settlements, dating
from the Norman Conquest and prolonged as a conse-
quence of the Wars of the Roses, as well as the ready
acquiescence of corrupt judges in illegal conveyancing
tricks, have made land artificially scarce and dear to the
mass of the people who want to use it.
^ Six Centuries oflVork and Waget^ p. 6. * Ibid, p. 398.
CHAP. IX INDIVIDUALISM 257
By successive Enclosure Acts the common land of
England was handed over to the lords of the manor,
and the people, deprived of their immemorial right to the
rent-free use of the greater part of English soil, were
made dependent upon wage-labour as their sole means of
existence.^
The confiscation of Church lands in 1536, 1539, and
1548, and their bestowal upon private persons, deprived
the people of funds used to a considerable extent for
educational and charitable purposes, and hastened the rise
in the rental of agricultural land which first impoverished
and ultimately extinguished the yeoman class.
By the substitution of excise for feudal dues, 12
Charles II. 1660, and the Redemption Acts of 1692 and
1798, the whole system of land tenure and taxation was
revolutionised. Instead of tenants of the Crown, the
landholders now became landowners ; and instead of the
expenditure of the government being defrayed out of the
rent which they paid for their land, it was now met out
of taxes placed on the labour and consumption of the
whole people. As if to leave a permanent record of their
turpitude, the landowners left upon the Statute-book the
rudiment of their former obligations in a land-tax of 4s.
in the pound of annual value — on the valuation of 1692.
The destruction of the guilds and confiscation of their
property by Henry VIII. deprived the artisan class of the
advantage of these " fi-iendly society " funds, from which
they had largely obtained support in youth and old age,
loans, widows' allowances, and apprentice fees for their
sons.
The debasement of the coinage by Henry VIII. and
Edward VI. " was potent enough to dominate in the
history of labour and wages from the sixteenth century to
the present time, . . . for sixty years prices were more
than doubled, while a very miserable increase was effected
in the wages of labour." *
While these enactments deprived the labouring masses
^ For a list (not full) of Enclosure Acts, see Cunningham, England^s Industry and
Commerce^ p. 476. He enumerates 343 1 separate Acta in addition to the general Act
of 1801.
'^ Rogers, Six Centuries, pp. 345, 346.
S
258 DEMOCRACY VERSUS SOCIALISM partiii
of all power of independent employment, fastened the yoke
of landlordism on their neck, and accustomed them to a
lower standard of life, other measures, aiming more directly
at their degradation, were devised in plenty.
The Statute of Labourers, 22 Edward III. 1349 —
constantly re-enacted in subsequent reigns with increased
penalties both on labourer and employer — fixes the maxi-
mum wages of labour at those customary in 1 347, both
for agricultural labourers and artificers, and makes their
refusal to accept employment at these wages a punishable
oflFence.
Statutes of Henry VIII., Elizabeth, and James I. visit
refusal to work for wages practically fixed by a council of
employers, with slavery, branding, whipping at the cart-
t^l, and ultimately death.
The Acts of Settlement 13, 14 Charles II. and 8, 9
William III., forbidding the labourer to leave his parish,
made him, for all practical purposes, once more the serf
of the local landowners.
Numerous Acts, beginning with 33 Edward I. 1305,
and continuing to the beginning of the nineteenth century,
forbade labourers, under savage penalties, to combine for
purposes which might affect the conditions under which
their labour was sold and purchased.
While the wages of labour were thus depressed directly
and indirectly by legislative enactments, the labourers*
food, clothing, and all other necessaries of life were largely
increased in price by so-called protective legislation, of which
the detested Corn Laws were only the most prominent.
These, as well as other long-continued efforts to enslave
the working classes of England, bore fruit at last in their
abject condition during the second half of the eighteenth
and the first half of the nineteenth century. Utterly im-
poverished and pauperised, starved physically and morally,
they found themselves suddenly confronted with new in-
dustrial conditions which, substituting factory for home
work, concentrated industry in the hands of a comparatively
small number of employers. The State had done its work
so well, that the workers had no power of resistance left ;
could not possibly raise themselves out of the abyss into
CHAP. IX INDIVIDUALISM 259
which they had been thrust by the State itself. The only
hope of ameliorating their condition, therefore, lay in
remedial action by the State, i.e, legislation which should
remove some of the laws through which they had been
enslaved, or which should mitigate some of the worst
symptoms of this State-created slavery.
Fortunately for the peace of Great Britain, the rivalry
between the capitalistic and landowning classes enabled a
few far-seeing or philanthropic reformers to induce the
State to thus mitigate the disasters which its own action
had deliberately provoked. In Great Britain, where the
earlier development of machine -industry had intensified
these evils more than elsewhere, this reaction also found
its earliest expression in Factory Laws, Mines Regulation
Acts, Truck Acts, the repeal of Anti-Combination Laws,
of laws fixing wages, and of laws of settlement, as well as
in the re-establishment of Free Trade. But though these
beneficial enactments have removed some of the causes
and mitigated some of the symptoms of the degradation
of the working classes, other and far more powerful causes
of this degradation remain in full force, while others have
been added since. The recovery, wonderful as it is, has
therefore been partial, and cannot become complete till
after the removal of the remaining limitations of and en-
croachments on equal individual rights. Moreover, as in
social matters the removal of a cause is not followed at
once by a cessation of its effects, the long-continued re-
pressive action of the State has lowered the moral standard
of the masses of the people, largely preventing the co-
operative action now open to them, and has established a
customary standard of wages and working hours which it
has taken fifty years of comparative freedom to modify,
but which has not yet been broken through.
The continued action of past interferences with the
equal natural rights of all, thus combines with the inter-
ferences stiU maintained to produce the prevailing social
injustice. Individualism, by removing the interferences
still existing, seeks so to stimulate social life that it may,
in due time, cast out the evil results which have flowed from
both. As the past and partial social evolution has been
26o DEMOCRACY VERSUS SOCIALISM part hi
in the direction of better maintenance of equal individual
rights, as a gradual diminution of social injustice and of
the degradation of the people has accompanied this gradual
approach towards Individualism, so further evolution in
this direction must produce further amelioration ; and the
complete organisation of society on individualistic lines, on
the maintenance of the fullest freedom of each limited
only by the equal freedom of all others, must ultimately
remove social injustice and give to all the opportunity of
leading higher and nobler lives.
I
PART IV
THE OUTCOME OF SOCIALISM
CHAPTER I
THE UNCONSCIOUS GROWTH OF SOCIAL STRUCTURES
A WANDERING tribe of savages is merely a transitory
assemblage of human beings. Possessing no social
Structures, no framework around which its units can
cluster, the horde can and does easily divide into parts, each
of which henceforth leads a separate existence. Increase of
numbers, scarcity of food, dissensions, frequently provide
the occasion for such division, and the resulting smaller
groups carry on their lives as easily as before.
This transitory human assemblage becomes a social
organism when, and in so far as, it acquires separate
structures. As these structures increase in number and
definiteness, social life increases in coherence. For the
multitudinous parts of the social organism, each performing
a separate function necessary to the full life of the whole,
are then bound together by mutual dependence. Separa-
tion into parts then becomes impossible, because the parts,
though distinct, are dependent upon reciprocal aid for the
continuance of their lives.
Social evolution, like all evolution, therefore, proceeds
by the gradual accumulation of small changes, from the
structureless state, through a state of few and vague
structures, to a state of multiform and definite structures.
Among savages there is no unlikeness of occupations
except that which is imposed by difference of sex. Every
adult male is a hunter, warrior, armoxirer, and builder.
Every adult female digs roots, catches fish, prepares skins,
and acts as a beast of burden.
Civilisation, even of the most rudimentary kind, pre-
264 DEMOCRACY VERSUS SOCIAUSM part iv
supposes some division of labour, and advances as these
divisions multiply. Farmers and agricultural labourers,
manufacturers and operatives, wholesale and retail dealers
and their employees, the several professions and the various
government J agencies, as well as innumerable other divi-
sions and their several subdivisions, form differentiated but
mutually dependent groups, making the social organism
variegated in the highest degree. Groups of men are thus
made unlike each other by the discharge of unlike functions
in maintaining the lives of all.
This multiplication of social structxires is accompanied
by a like growth in the definiteness of each of them. In
civilised societies each group, carrying on separate and
differentiated occupations, is clearly defined and specialised.
The inhabitants of towns no longer cultivate fields ;
farmers no longer spin their own yarn and weave their own
clothes, are now abandoning even the making of butter.
Nor do weavers now carry on agriculture as a subsidiary
means of earning a livelihood ; goldsmiths no longer act
as bankers, nor builders as architects. Nay, the process of
specialisation has proceeded so far that special groups devote
themselves to the making of parts of things only.
This multiplication of increasingly definite structures
results in greater interdependence and consequently greater
coherence. Each structure as it becomes more efficient in
the discharge of its particular function becomes less capable
of performing any other function. Each structure, there-
fore, depends for the efficient discharge of its function
upon the efficient discharge of their respective functions by
all other structures. The groups which carry on mining,
manufacturing, transporting, and exchanging, as well as
those discharging other social functions, depend upon the
agricultural group for their food supply ; while the
agricultural group would be unable to efficientiy produce
food without the assistance of the mining, manufacturing,
transporting, and exchanging groups. Similarly all forms
of manufactures depend upon mining and agriculture for
the supply of raw material ; while mining depends again
upon manufactures for its machines, tools, explosives, and
other necessaries. Similarly close is the interdependence
CHAP. I SOCIAL STRUCTURES 265
of the various groups of manufactures, and their dependence,
as well as that of all other producing groups, upon the
transporting and exchanging groups. The latter, con-
ditioned in its turn by the producing groups, has evolved
interdependent groups of wholesale and retail dealers,
brokers and agents, and the existence of this exchanging
system implies the existence of roads, railways, canals ; of
vehicles, ships, and boats ; of posts, telegraphs, and tele-
phones ; and of the separate organisation of the carrying
trade. The development of this system of transport and
communication is in its turn conditioned by and dependent
upon that of the various producing groups and of the
exchanging organisations which connect them with each
other and with those social groups which provide for
the satisfaction of other than material desires. All this
mutual dependence upon reciprocal aid is made possible
by the existence of still other groups, which, ensuring
efficient defence against external and internal aggression,
are in their turn maintained by the effiDrts of all other
groups.
A social organism is thus a highly complex compound
of multitudinous, specialised, interdependent, and mutually
conditioned structures akin to those of which animal
organisms are compounded. And as, when in animal
organisms any structure ceases to perform its functions,
there results either the cessation of the performance of their
respective functions by all other structures, i.e. death, or
at least such a strain on other structures as adversely
affects the whole organism, so like results follow if any
social structure ceases to perform its functions. And as
no structure of any animal organism can carry on its
activities when separated from the rest, so are the groups
forming each social structure unable to carry on their
activities when separated from all other groups.
This growth in the number and definiteness of
structures is not confined to the industrial life of a nation.
The chief of a small tribe may easily perform all govern-
mental functions while producing his own sustenance.
When, however, the social organism has grown into a
compound of several tribes, the greater number of the
k
268 DEMOCRACY VERSUS SOCIALISM partiv
British Constitution, nay, of the British Empire itself, as
well as the spontaneous growth of law and the equally
spontaneous differentiation of the several departments of
government, are now accepted facts, and are similarly true
of every other nation. Not the will of individual rulers,
of the great men of history, but the natures of the individual
citizens, as derived through heredity and conditioned by
the past history of the race, and the conditions now
surrounding them, determine the form and character of the
government of every nation.
A survey of the field of social structures thus shows
that human society is an ever-changing organism, owing its
growth to no premeditated plan, but to the spontaneous
action of the units which compose it ; each of whom,
efficiently seeking to gratify his own desires, unconsciously
contributes to the gratification of others' desires and to the
ever-changing structural organisation of the society to
which he belongs. The governing agencies, themselves the
outcome of this unconscious action, may in some directions
modify this spontaneous growth. Compared with the
innumerable instances of hindrance of social growth by
governmental interference, those which show furtherance
are very rare.
Socialism disregards the history of social evolution, the
unconscious growth here inadequately sketched ; involves
its discontinuance and the substitution for it of a conscious
and premeditated further evolution. For if the State
conducts all industries, future changes in the organisation
of industries can only be made under the direction of the
State. No longer would changes of structures result from
spontaneous individual action directed towards the satis-
faction of individual desires. Such changes could then
come only from State action consciously directed towards
structural changes. And as the State conduct of industries
and equality of distribution involve the control by the
State of the professions, of all scientific and artistic bodies,
in fact of all social structures, no changes in any of them
could arise except through the conscious action of the
regulative agency. Unconscious evolution would thus be
supplanted by consciously directed evolution throughout
CHAP. I SOCIAL STRUCTURES 269
the social organism. Can the latter process supply an
efficient substitute for the former ?
As in all other organisms, the gradual and spontaneous
evolution of structures serviceable to human society is
equalled by the gradual and spontaneous decline of
structures no longer serviceable. The evolution of new
and more serviceable structures frequently displaces older
and less serviceable structures, while it may stimulate the
growth of other structures.
Thus the growth of the bicycle industry has adversely
affected various other industries, as the manufacture of
pianos, of music, and of silken fabrics, while stimulating
that of certain woollen dress materials. The manufacture
of matches has put an end to that of steel, flints, and
tinder ; the manufacture of coal-tar colours has reduced
the cultivation of indigo and madder, and the preparation
of cochineal ; the rise of mechanical weaving almost
annihilated hand-loom weaving ; and railways have largely
displaced the transport of goods and passengers over
roads.
The accumulation of knowledge, of discoveries and
inventions, is partly the result and partly the cause of
structural evolution. The gradual improvement of primi-
tive tools into modern machinery would have been im-
possible in the absence of differentiation of occupations ;
and each improvement in implements and processes has
made possible, if not necessary, further differentiation. As
long as a spinning-wheel and simple hand-loom were the
most efficient implements in general use for the conversion
into fabrics of wool, flax, and cotton, a farmer's wife and
daughters could usefully devote some of their time to
spinning, while weavers could, with equal advantage, use
their unemployed time in agriculture. But the invention
and extended adoption of spinning machinery and power-
looms made such subsidiary occupations economically dis-
advantageous. Specialising and extending the spinning
and weaving industries, these inventions also rendered the
occupation of farming more specialised. Similarly, the
invention of cream-separators, while specialising and ex-
tending the manufacture of butter, has, by reducing the
270 DEMOCRACY VERSUS SOCIALISM part iv
manufacture of home-made butter, stiU further specialised
the occupation of farming.
While thus furthering the specialisation and growth of
existing structures, inventions and discoveries cause the
rise of new and additional structures. The numerous
groups engaged in the manufactxire of electrical appliances
and in the supply of electric light and power ; those who
are engaged in the manufacture of bicycles, of motor-cars,
and of refrigerating machinery ; others which supply frozen,
desiccated, compressed, and tinned foods, — are recent ex-
amples of this causation.
Change in demand, induced by the supply of new and
more useful services or by mere changes in desire, is the
proximate cause of the growth of structures, either in
addition to or at the expense of other structures. Thus
changes in desire have reduced the mohair industry to
meagre proportions, while fostering the manufacture or
cashmeres, and have almost terminated the manufacture
of crinolines and roller-skates.
Change in demand is, however, not the ultimate cause
of the evolution of new structures. For before a change
in demand, or an additional demand, can arise, the de-
manded thing must be known. Some supply must, there-
fore, precede demand. Hence, new structures are created
by individuals or groups of individuals, who endeavour by
the production of some new thing to satisfy their desires
with less exertion. If the new structure proves serviceable
to others, their increasing demand causes its growth and
may consequently cause the decline or disappearance of
other structures. If the new structure prove unserviceable,
the absence of demand rapidly causes it to disappear again.
But it is of importance to observe, that before the new
structure can prove its utility, it must have begun to dis-
charge its functions. Change in demand, therefore, while
inducing alterations in the relative size and importance
of existing structures and the disappearance of useless
structures, cannot be the originating cause of new struc-
tures. The origin of new structures is due to the initia-
tive of intending suppliers. While not undervaluing
the importance of the structural changes induced by the
CHAP. I SOCIAL STRUCTURES 271
former cause, it is nevertheless evident that those induced
by the latter are of greater importance.
Structural changes, due to the action of individual
suppliers, are impossible in the socialist State. As all
industries are managed by the State, inventions and dis-
coveries can only be adopted by the governing agency.
This change, combined with equality of reward, must
reduce to a minimum the most important feature of social
growth, the addition of new structures and the super-
session of old structures by new structures.
As every man and woman must be compelled to work
at his or her appointed task a given number of hours
every working day, the researches and experiments which
result in discoveries and inventions would be largely re-
stricted. No one, except those appointed by the State to
do such work, could carry on researches and experiments
during working hours, and all other intending discoverers
and inventors would, therefore, be restricted to their spare
time for such work. At the same time no private person
would possess the necessary means for lengthy and costly
researches and experiments. By far the greater part of
the inventive and scientific genius of the nation would
thus be rendered fruitless.
Moreover, the remainder would be rendered less finiitful,
because Socialism would withdraw the most powerful
motive, or at least one of the most powerful motives, which
induce men to devote their energies to the invention of
new processes and implements. For as equality of
material reward is one of the fundamental tenets and
an absolute necessity of Socialism, inventors and discoverers
could not receive any pecuniary reward for additions to
the wellbeing of society, however great these might be.
Socialists generally maintain that, in the absence of
such pecuniary reward, men would be impelled to make
discoveries and inventions, partly by the necessities of
their nature and partly by the honourable distinction which
success would confer upon them. However true this may
be of some exceptional men, it cannot be true of all
inventors and discoverers. Moreover, even in the case
of the exceptions, the impossibility of obtaining any
272 DEMOCRACY VERSUS SOCIALISM partiv
material reward obviously withdraws one of the main
motives which stimulate their efforts. Two causes would
thus be active in reducing the number of those who other-
wise would devote their labour to the mostly thankless
task of improving the appliances and methods of industry.
Fewer men therefore would do so, and these would be
impelled less powerfully in this direction. Hence the
number of inventions and discoveries would be enormously
reduced.
At the same time the adoption of such discoveries
and inventions as might still be made would be largely
hindered. The adoption of new processes and appliances
frequently involves the discarding of existing processes
and appliances. Employers are loth to do so, on account
of the pecuniary sacrifice involved, and workmen generally
object to change the system of working to which they
have been accustomed. The stimulating action of com-
petition overcomes these obstacles. The employer who
first adopts an invention or new process does so in the
expectation of gaining an advantage over his competitors ;
while other employers subsequently adopt it in order to
minimise the advantage which the former has gained.
Workmen waive their objection, either in response to the
expectation of higher earnings, or forced by the insecurity
of employment.
None of these motives actuates the officials of the State.
They can gain no personal advantage from the adoption
of inventions and discoveries which must impose upon
them additional exertion and responsibility and may expose
them to unpopularity, not only on account of the expense
involved, but also on account of resulting changes in
working methods.
Moreover, inventions do not generally spring perfect
from the brain of man. On the contrary, when any
industrial difficulty invites the application of inventive
genius, many unsuccessful attempts at its solution generally
precede the successful one. The successful inventor, how-
ever, has almost always profited by the failures of his
predecessors. As a socialist writer ^ happily expresses it : —
^ John A. Hobson, Evdution of Modern Capitalitm^ P* 57*
CHAP. I SOCIAL STRUCTURES 273
" The earlier increments of a great invention make no
figure in the annals of history because they do not pay,
and the final increment which reaches the paying point
gets all the credit, though the inherent importance and
the inventive genius of the earlier attempts may have been
as great or greater."
This almost certainty of many fdlures before a suc-
cessful solution can be found must still further discourage
State oflSicials from adopting inventions. They would be
blamed for failures while another might reap the praise
for success to which their failures had contributed. It
would be far safer to do nothing than to run this risk.
Hence, to the absence of all inducement to experiment
with new inventions there are added several motives on
the part of officials, supported by widespread motives on
the part of regulated workers, discouraging the adoption
of inventions. Not only the inertia of officials, but their
active opposition and that of the units composing the older
structures, has to be overcome, before a new structure can
arise or an old structure be removed. Those who oppose
the adoption of new processes and appliances are numerous,
organised, and consequently powerful ; while those who
urge it, having mostly no personal interest to serve, are
few, unorganised, and therefore comparatively powerless.
The opposition, moreover, has a powerful argument in the
uncertainty of success of the contemplated change, which
as yet has no practical proofs to oflFer. Under such cir-
cumstances, officials wedded to routine and dreading
additional trouble and responsibility will generally decide
in favour of things as they are.
Even at the present time, when the example or com-
petition of private industry stimulates the action of State
officials, their adoption of inventions and discoveries lags
far behind. Innumerable examples might be quoted of
State departments refusing for many years to use processes
and appliances which privately conducted industries had
proved to be advantageous. This tendency of State
departments to remain in a groove is so distinct and
universal that it has become proverbial. Yet this tendency
must be infinitely greater under Socialism, on account of
274 DEMOCRACY VERSUS SOCIALISM part iv
the total absence of the stimulus which the existence of
private industries provides.
Not only would Socialism largely reduce the discoveries
and inventions which produce new industrial structures
and supplant older ones, but it would also raise almost
insuperable obstacles to the adoption of those which
would still be made. It would, therefore, largely hinder
if not entirely prevent the further growth of the social
organism.
One more consideration must be glanced at. In the
rare cases in which the predisposition of some powerfiil
official might overcome these obstacles, another danger
arises. As already pointed out, the growth of a new
structure frequently involves the decline of one or more
other structures. When demand is free, the growth of
the new and the decline of the old structure can only take
place on condition that the former is more serviceable
than the latter. The whole body of consumers determines
this question ; and if their verdict is unfavoxirable to the
new structure, it disappears. Under Socialism, howevei,
the body of consumers is not free to give a verdict. The
administration may cease to produce an old and preferred
article in favour of a new and less acceptable one. Yet
the consumers will be compelled to accept the latter in
place of the former. Or — and here the danger is greater
still — the administration may supersede a less laborious
and costly process by one more laborious and costly.
Neither the consumers nor any other agency could prevent
such action. There is, therefore, no guarantee imder
Socialism, such as is now provided by the action of com-
petition, that new structures would be more serviceable
than the older structures which they displace. Not only
would the evolution of new structures be rare, but such
as did evolve might result in retrogression instead of
progression.
There remains to be considered the influence of the
socialist State on the alterations in the relative size and
importance of structures which originate in changes of
demand. Considerations advanced in the last paragraph
show that, in the absence of private and competing in-
CHAP. I SOCIAL STRUCTURES 275
dustries, consumers are compelled to accept such goods
and services as the State supplies. Freedom of demand
would, therefore, be seriously restricted, and changes in
the relative growth of structures would no longer be
determined by their relative utility as proved by the action
of individuals desiring their services. Such changes might
be determined by the will of officials who might err as to
the relative utility of structures, or who might be actuated
by other considerations.
Nay, the State will be compelled largely to disregard
the utility of structures as shown by the infallible test of
demand, and will be compelled to abolish multitudinous
structures which render social services. In order to
regulate supply, the central regulative agency must
determine how much of every kind and quality of goods
will be required and shall be produced. Changing
individual tastes and changing fashions render it impossible
to make an even approximately correct calculation, while
the regulative influence of changing values is lost. There-
fore, the State would be compelled to abandon the infinite
variety of qualities, designs, and colours which private
industry supplies under the pressxire of individual tastes.
The desires of the consumers would be disregarded, the
products of State industry would be confined to as few
qualities, designs, and colours as possible, and these would
inevitably become permanent. Not only would changes
in the relative growth of structxires be reduced, but the
number of soci^y useful structures would be diminished.
This diminution would, moreover, be added to by the
disappearance of all those structures which subserve the
wants of the wealthier classes.
The reduction in the number of socially useful
structures and subsequent stagnation would, however,
extend beyond the industrial field. As previously pointed
out, science, art, and literature must be placed under State
regulation if equality of remuneration is to be maintained.
Not those best qualified, but only those selected by the
regulating agency, would follow these pursuits. Instead
of the eager and vigorous scientific, artistic, and literary
life of to-day, with its ever multiplying and expanding
276 DEMOCRACY VERSUS SOCIALISM part iv
structures, there would arise Egyptian and Chinese con-
ditions of barren formalism, monotony, and stagnation.
A free press is likewise incompatible with the fundamental
tenets of Socialism. The production of newspapers, like
every other form of production, must be carried on by
the State through paid officials. An enormous reduction
in the number of daily, weekly, and monthly journals, and
the utmost servility of the remaining ones, would thus
be inevitable, reducing periodical literature to the same
barrenness and stagnation as that inflicted upon general
literature, science, and art.
The growth of a social organism, like that of all other
organisms, is conditioned by the flexibility of its structures.
Where permanency of structure has been attained, the
growth of the organism ceases ; where growth ceases,
decline begins. The permanency and want of flexibility
of structures which have been shown to be inevitable in the
socialist State would, therefore, not only lead to the cessation
of all further social progress, but to the loss of much of the
progress achieved in the past. Stagnation, rapidly to be
followed by retrogression, therefore, would be the lot of
the nations, who, lacking the courage to undergo the
strenuous exertion which the wellbeing of the race demands
of them, would seek an inglorious repose in the enervating
embrace of Socialism.
CHAPTER II
THE UNCONSCIOUS DISCHARGE OF SOCIAL FUNCTIONS
The separate and unlike structures of the social organism,
like those of all other organisms, discharge separate, unlike,
and interdependent functions. The due performance of its
function by one structure is conditioned by the due per-
formance of their respective functions by other structures.
Thus, that the manufacturing groups may produce, a due
supply of raw material and food must be supplied to them
by the extracting groups, which process is dependent upon
the supply by the manufacturing groups of machines, tools,
various prepared materials, clothing, and like necessaries.
This, as well as all the other interchanges, cannot be carried
out without the due discharge of their functions by the
transporting and exchanging groups, which, again, is
dependent upon their being supplied with food, clothing,
and other necessaries by the extracting and manufacturing
groups.
The interdependence of functions here indicated per-
vades the whole social organism in endless ramifications,
and, stretching beyond national limits, combines all the
nations of the earth into one larger social organism.
Growing in extensity, it also grows in intensity. For, as
structures multiply, each becomes more specialised with
regard to the function which it discharges, and increased
specialisation renders the discharge of other than the
habitual function more difficult and ultimately impossible.
The due discharge of any function thus becomes more and
more dependent upon the due discharge of all other
functions. Should any function remain undischarged, the
278 DEMOCRACY VERSUS SOCIALISM partiv
life of the social organism is rendered less full and may
even be extinguished. The reciprocal aid resulting from
the due discharge of mutually dependent functions by the
several structures is co-operation in its highest form.
All increase in the power of man over that with which
nature endows the individual comes from the co-operation
of individuals, from the co-ordination of their efforts
towards a conmion end. The co-ordination of efforts may,
however, take place consciously or unconsciously.
Where there is no differentiation of structures there is
little interdependence and co-operation. Among savage
tribes co-operation is consequently mainly confined to the
activities involved in war and hunting. The activities
co-ordinated for these purposes in order to be effective
must be guided by the will of one man towards a pre-
meditated end. The immediate object aimed at being the
benefit of the tribe as a whole and not that of any
particular individual, participation in this form of co-
operation becomes compulsory. This trait of compulsion
is an inherent necessity of all co-operation which is con-
sciously directed towards public ends, i.e. of all co-operation
directed by governmental agencies. The organisation and
regulation of an army displays it most clearly. Not only
must the State, if necessary, be able to enforce the participa-
tion of all fit individuals in military activities, but the army
must be so organised that the will of the supreme commander
makes itself felt throughout all ranks. Implicit obedience
to the orders of superiors being an indispensable condition
of efficiency, individual volition must be disregarded, and
abstention from co-operation must entail punishment.
Similar compulsion distinguishes the organisation spreading
through the whole body of society, which either enforces
actions deemed necessary for the wellbeing of society or in-
hibits actions deemed detrimental to the wellbeing of society.
Closely akin to this socially organised co-operation is
that kind of industrial co-operation which by a similar
combination of individual efforts aims at the accomplish-
ment of tasks which exceed the physical power of the
individual. Whether the result aimed at is the simple one
of moving an object too heavy for the physical power of
CHAP. II SOCIAL FUNCTIONS 279
any one of the co-operators, or whether it is the infinitely
more complicated one of altering the course of a sailing
vessel, this kind of industrial co-operation involves the
subjection of many wills to one will in the conscious
achievement of a common and premeditated object.
All co-operation which consists in the combination of
efforts, therefore, has the following traits : — ( i ) The
common object and not the individual benefit of the
co-operators is consciously and immediately aimed at.
(2) Efficiency requires the subjection of the individual
volitions of the many to the will of a regulative agency.
(3) Except in its simplest forms such co-operation is
compidsory also in the sense that those who engage in it
are not free to abandon it when and where they please.
(4) It neglects to utilise the mental power of the
regulated many, and utilises their physical power alone
under the mental direction of the regulators.
While this form of co-operation has its social uses in
securing certain limited results, it fails to secure others
which involve a longer series of more delicate and com-
plicated conjoint actions. Whenever, in the course of
social growth, individuals find their wants better satisfied
by exchanging goods which they can make best, or services
which they can perform best, for other goods or services in
the making and rendering of which they are less skilled, or
for which they are less suitably circumstanced, there arises
a different kind of co-operation which consists of the
separation of efforts. This separation of efforts enables
one individual to perform for many individuals tasks,
each of which does not require the full power of an
individual. When, for instance, one specially skilled in
the making of weapons confines his efforts to the object
of making weapons for many, he relieves these others of a
task which does not require the fidl power of each of them.
Lacking the special aptitude of the one, and still more the
added skill which constant repetition of a given action
evolves, the many find it advantageous to obtain weapons
from the one. Confining themselves to pursuits for which
they possess special aptitudes, they also acquire additional
skill by repetition, and, exchanging part of the produce of
28o DEMOCRACY VERSUS SOCIAUSM partiv
their skilled labour for part of the produce of the skilled
labour of the weapon-maker, the desires of all are satisfied
more skilfully, i.e. the desires of all of them are satisfied
with less exertion, or an increased number of desires can be
satisfied without increase of exertion.
The advantages thus derived from co-operation through
the separation of efforts cause the gradual evolution of
the social organism from the state of few and vague
structures to the elaborate structural and functional
diflferentiation dependent upon reciprocal aid which dis-
tinguishes civilised societies. That one group of indi-
viduals can devote all their labour to the production of
watch-springs is made possible, primarily, by the fact that
other groups devote their respective labour to the pro-
duction of some other component part of watches, and
that still other groups devote their labour to combining the
several parts into complete watches. Ultimately, however,
the performance of this social function by the composite
group of watchmakers depends upon the due performance of
other social functions by other groups similarly or still more
elaborately compounded. Food must be produced by
some groups, clothing by others, furniture and buildings
by still others ; books must be written and printed by the
co-operation of several other groups ; multitudinous groups
forming the transporting and exchanging system must
perform their several functions, as well as many others
too numerous to mention. These many groups are them-
selves interdependent, the performance of the function of
each of them being conditioned by the performance of
their respective functions by all other groups. Moreover,
this simultaneous co-operation of many groups is accom-
panied by a successive co-operation. For each consumption-
good is the ultimate result of the successive co-operation of
groups, each devoting its efforts to the production of an
intermediate good, as in order that bread may appear there
are successively produced iron, agricultural machinery,
wheat, milling machinery, flour, and baking appliances.
This co-operation, consisting of the separation of efforts
in time and space, is distinguished in other respects from
the kind of co-operation which consists of the combination
CHAP. II SOCIAL FUNCTIONS 281
of efForts. The latter consciously and directly aims at the
attainment of a common benefit, leaving individual benefits
to result indirectly from the attainment of the conmion
benefit. The former consciously and directly dms at the
attainment of individual benefits, leaving the common
benefit to result indirectly from the attainment of individual
benefits. Every one of the innumerable millions who
participate in this co-operation has no other object in view
than the satisfaction of his own desires and those of his
immediate dependents, the maintenance of his and their
lives. Yet it is impossible for any of them to attdn this
object without contributing to a corresponding extent to the
satisfaction of others' desires and the maintenance of their
lives. Each of them thus consciously aims at the attain-
ment of an individual and proximate object, and in the
measure of its attainment he unconsciously contributes to
that of a social and ultimate object.
Moreover, because the individual and not the common
object is immediately aimed at, there is here an absence of
the regulation and compulsion which were found to be
essential conditions of the co-operation which aims directly
at common objects. For the object of each co-operator
being the satisfaction of his desires with the least exertion,
his attainment of this object being dependent upon the
extent to which his efForts enable others to satisfy their
desires in like manner, it follows that the social object, the
satisfaction of the desires of all with the least exertion, is
attained automatically.
Yet another difference must be pointed out. The
co-operation which consists of the combination of efforts
more or less fails to utilise the mental power of all but
those who form the regulative agency. Obedience to
orders required of the regulated precludes the use or full
use of their mental power, and claims only the conjunction
of their physical efforts towards the achievement of the
common task. The reason may be found in the fact,
that whUe the physical power of a group of men,
intelligently directed, is equal to the sum of the physical
powers of all of them, their mental powers cannot be so
compounded. Ten men pulling at a rope can draw ten
\
282 DEMOCRACY VERSUS SOCIAUSM part iv
times as much as one man ; but ten men cannot reason
ten times as well as one man. Their reasoning power,
therefore, can only be utilised if each of them works at a
separate task ; it must be neglected when they combine
their efforts towards the accomplishment of a common
task. The combination of the physical efforts of a group
of men under the mental direction of one, therefore,
necessarily involves the neglect of the intelligence of all
but one man. As far as the object in view is concerned,
the rest might be devoid of any greater intelligence than
is required for the understanding of the commands of the
one man.
The unconscious co-operation which consists of the
separation of efforts, however, utilises both the physical
and mental powers of all the co-operators. Each chooses
his own occupation, and within this occupation brings his
mental as well as physical power to bear upon his in-
dividual task. It is true that each sub-group exhibits to
some extent the relation of regulator and regulated, of the
captain and the privates of industry, and that the former
alone determines the immediate objective of the common
efforts of the sub-group. This regulation, however, is
far different from that previously considered. For as the
co-operation results from separation of efforts, each
regulated co-operator has still to use his mental power in
the accomplishment of his separate task, while the regulator
uses his intelligence in the co-ordination of their several
tasks. Moreover, no superior authority co-ordinates the
labour of the several sub-groups which co-operate un-
consciously towards the achievement of the ultimate social
object. Hence, while conscious co-operation utilises only
an insignificant part of the intelligence of the co-operators,
unconscious co-operation utilises the whole sum of their
individual intelligences. The latter, therefore, is a higher
and more efficient form of co-operation, and its product
must be superior to that of the former. It consists of the
unconscious, voluntary, and reciprocal discharge of social
functions by individuals and groups of individuals, all of
whom, in the conscious pursuit of their individual ends,
conjoin their mental and physical powers in unconsciously
CHAP. II SOCIAL FUNCTIONS 283
maintaining the life of the social organism with the least
exertion on the part of all.
The essential diiFerence between these two kinds of
co-operation may be most fully perceived when the
method of provisioning an army is contrasted with
that of provisioning a great city. In the former case
the head of the Commissariat Department decides upon
the kinds, quantities, and qualities of the necessary supplies,
as well as upon the delivery of stated quantities at given
times and places. His orders are transmitted to a set
of officials, each of whom takes control of the execution
of a part of them by transmitting corresponding com-
mands to other and carefully graded sets of officials.
A closely graded and extensive regulating mechanism is
thus consciously set in motion by one man, and more
or less successfully accomplishes the purpose which he
preconceived.
The task of supplying a great city with all its in-
numerable daily requirements is accomplished without
such preconception, regulation, and direction. Whole-
sale merchants, each dealing with a few kinds and qualities
of goods, and with only a small part of the required
quantity of these, without concert among themselves,
each consciously intent, not on the ultimate object, the
supply of the city, but only on the immediate object, the
earning of his own living, set in motion the machinery
which brings the daily supplies. From the stores thus
collected retail merchants purchase their supplies ; each
again being more or less ignorant of what his fellows are
doing, and intent only on his own advantage through the
satisfaction of some of the desires of his clients. Yet,
though there is no conscious direction and no compulsory
regulation, though the ultimate purpose which all these
agencies subserve is not consciously before the mind of
any one of them, the wants of a great city are satisfied
with unfailing regiilarity, while the provisioning of an
army is rarely a complete success, and frequently a more
or less startling failure.
Nevertheless, the latter task is far less complicated and
difficult than the former. For an army is mainly com-
284 DEMOCRACY VERSUS SOCIALISM partiv
posed of males in the prime of life, and no attempt is
made to supply more than is absolutely necessary to keep
them in health and strength. The variety of goods with
which the commissariat of an army deals is, therefore,
exceedingly limited, while the quantity required of each
is known, and the task to be performed is correspondingly
simplified.
The inhabitants of a large city comprise on the other
hand individuals of ail ages, of both sexes, and of infinite
variety of condition. The variety of goods to be supplied
is, therefore, infinite in kind and quality, and the amoimt
required of each kind and quality of goods varies almost
from day to day. The task which unconscious co-opera-
tion fulfils with unfailing regularity is, therefore, infinitely
more complex than that which conscious co-operation
rarely succeeds in fulfilling.
Nor is the success of the one and the comparative
failure of the other a mere accident which might be
avoided by better organisation. For the more important
and regularly recurring functions of all organisms are
discharged unconsciously, while less important and
irregularly recurring functions only are consciously dis-
charged. Animal organisms direct consciously only such
activities as their rate of motion and alimentation, while
the more important activities, as respiration, circulation of
the blood, digestion, and others, are discharged uncon-
sciously. No amount of training could enable any man to
efiiciently discharge such fimctions consciously ; the wisest
and most careful of men could not escape premature death
if he had to consciously direct these processes.
Likewise, a social organism can efiiciently undertake
the regulation of certain functions of minor importance
or irregular occurrence. But the most important of all
social hinctions, the satisfaction of the constantly recur-
ring and innumerable wants of its component units,
cannot be safely withdrawn from the department of
unconscious activities and placed under the conscious
direction of the social organism itself. For just as even
a temporary interruption of the respiratory process or the
circulation of the blood is fatal to the animal organism, so
CHAP. II SOCIAL FUNCTIONS 285
even a temporary interruption of the process by which a
social organism is supplied with the means of satisfying its
wants would be destructive of its life. Such interruption
is difficult, nay, almost impossible, where the supplies
originate in innumerable, self-directed, and independent
groups ; it is comparatively easy when supplies originate
in the mandate of a centralised agency. Apart, however,
from this consideration, the co-operative process is so
intricate and involved, so far surpasses the power of
control of any individual or set of individuals, that it
cannot be efficiently directed by them even under ordinary
circumstances.
Consider what is involved. A nation wants vegetable
and animal food, clothing, furniture, houses, literature,
artistic enjoyments and amusements, wants teaching,
healing, and many mental stimuli. The wants comprised
under each of these heads are of infinite variety and
varying quantity, and are largely dependent for their
satisfaction upon the uncertain response of nature to
man's efforts. The central agency regulating the co-
operative mechanism must nevertheless predetermine the
kinds, qualities, and quantities of goods, and services
which may be required at a given future time, and must
so direct production that all of them may be supplied.
Many processes of production involve the lapse of years
between their initiation and completion. The directing
agency must, therefore, be able to successfully estimate
the requirements of distant years in order to determine
the amount of labour which shall be devoted to the
present initiation of their production.
Besides this productive process, that of distribution has
to be carried out. The kinds, qualities, and quantities of
goods required at any point in the national territory have
to be determined beforehand, their transport to such points
must be accomplished, and they must there be distributed
in such equitable manner as has been decided upon.
Among other difficulties, insuperable in the absence of
the competitive process, that of determining the value of
every kind and quality of goods at a given time has to
be overcome.
286 DEMOCRACY VERSUS SOCIALISM part iv
Nor is even this all. For the production and dis-
tribution of all these requisites of infinite variety, millions
of men and women similarly varying in character and
aptitudes must each be allotted his or her appointed task,
and must be superintended in, and if necessary compelled
to, the performance of their respective functions. This
selection, regulation, and compidsion must be exercised
by the central agency through innumerable subordinate
agencies, the component units of which are mostly unseen
by and unknown to the central agency. Even if each unit
entering into the composition of the regulated body and of
the regulative machinery were actuated solely by the desire
to efficiently perform his or her task, efficient regulation of
the co-operation of all of them would transcend the power
of any man or body of men. But when every unit is
actuated by many and frequently conflicting motives,
when many, if not most, are actuated by desires the
satisfaction of which conflicts with the efficient perform-
ance of the task allotted to them, as will and must be the
case, efficient regulation from without is so obviously
hopeless, that it is difficult to understand the frame of
mind which can contemplate its possibility.
As the task of consciously organising and performing
the industrial functions of a society is beyond the power
of any man or body of men, so it is equally impossible
to consciously organise the performance of the scientific,
artistic, and literary functions. Science has conquered
so wide a field that no one mind can grasp a tithe of
its volume. The individual scientist, restricted to the
cultivation of a small part of the scientific area, can only
do so to advantage if its selection is left to his individual
predilection and predisposition. He may then advance
human knowledge by contributing a mite, which, in due
time, will swell the general stock. If, however, a regula-
tive agency organises science, as under Socialism it must,
individual aptitude cannot be considered. The future
scientist must be selected at a comparatively early age, and
must be ordered to fit himself for such branch or branches
as, to the selectors, seem most in need of recruits. Should
the regulative agency be of opinion that the number of
CHAP. 11 SOCIAL FUNCTIONS 287
investigators in one branch is excessive while in another it
is deficient, some must be transferred. By accident some
men may do the work for which they possess special
aptitude ; as a rule they will be compelled to neglect the
researches for which they are specially fitted and engage
in others for which they are less fitted or unfitted. Stag-
nation and retrogression, therefore, must take the place of
the active progress in all branches of science which dis-
tinguishes our period. For in science, and still more in
art and literature, Hegel's dictum is supremely true :
"Subjective volition, passion, it is that sets men in
activity ; men will not interest themselves in anything
unless their individuality is gratified by its attainment."
Art and literature, though giving the most complete
expression to national sentiments, are nevertheless still
more dependent upon the fullest freedom of the individual
to express himself or herself. To consciously select the
youths who shall be trained as artists and writers, to
afterwards prescribe to each of them the particular branch
of art and literature which he or she shall cultivate, is a
task which, even if it could be accomplished, would kill
all art and literature.
Moreover, while the task of consciously directing the
performance of these social functions vastly transcends the
power of the best and wisest of men, experience proves
that those who would be entrusted with it would be
neither the best nor the wisest of the men available.
Democracies have produced men of great ability and
of ' conspicuous honour to deal with great questions of
State. But where democratic governments have under-
taken the conduct of industrial functions, the task has
generally fallen into unreliable and incompetent hands.
Universal experience proves that the more detailed
governmental functions become, the more they deal with
industrial matters, the less lofty is the type of politician.
Abuse of power, neglect of duty, favouritism and jobbery
have been the almost universal accompaniment of in-
dustrial politics. Yet the temptations in the way of the
conductors of national industries are so great and numerous,
the task is so complicated, that even greater and loftier
288 DEMOCRACY VERSUS SOCIALISM partiv
qualities are required by them than by those who conduct
the wider affairs of the State.
In the Australian colonies governments have for many
years exercised industrial functions which cannot with
safety or justice be left to the conduct of individuals
without due compensation. Railways, telegraphs, tele-
phones, the postal service, the supply of gas and water, as
well as other functions, have been and are performed by
governmental agencies. Yet there is universal discontent
with the management of these comparatively simple in-
dustrial undertakings, a discontent in the expression of
which the journalistic and political advocates of the conduct
of all industries by the State have been and are loudest.
The foremost aim of Socialism is to substitute this
conscious discharge of social functions for their unconscious
discharge ; to supersede the world-wide voluntary and
undirected industrial co-operation by a compulsory and
regulated co-operation under the direction of the State.
The foregoing exposition proves that the co-operation at
which Socialism aims is inferior in type and less efficient
than that which it desires to displace, and that the success
of the endeavour would enormously reduce the oppor-
tunities of happiness. Before contemplating in greater
detail the social results which the establishment of the
industrial system of Socialism must produce, it is necessary
to examine the form which its organisation must assume.
CHAPTER III
THE INDUSTRIAL ORGANISATION OF THE SOCIALIST
STATE
Regulation from without is necessary to ensure the
welfare and continuance of the social organism in the
measure in which the self- regulation of the units com-
posing it is defective. As self-regulation grows in extensity
and intensity, regulation from without, becoming less
necessary, may be correspondingly reduced ; were self-
regulation complete and universal, all regulation from
without might be abolished with absolute safety. More-
over, unnecessary regulation from without, all that which
is in excess of the amount necessitated by the deficiency of
self-regulation, is not merely useless but socially harmful.
The maintenance of regulative agencies in excess of those
required for social weUbeing diminishes the maintenance
available for socially beneficial agencies, and thus hinders
their growth. Worse still, self-regulation being ethically
preferable to regulation from without, marking a higher
stage of social evolution, persistence of unnecessary regula-
tion from without hinders the further growth of this higher
social sentiment. Hence it is that, as we ascend from lower
to higher types of human society, regulation from without,
political, ecclesiastical, parental, and industrial, decreases in
extent and coerciveness. From the sanguinary despotism
of Dahomey, or the all-pervading pressure of the Roman
administration, to the freedom enjoyed under the British
and American constitutions ; from the ecclesiastical tyranny
of an African witch-doctor, or a mediaeval bishop, to the
comparatively small influence of ecclesiastical authority on
u
290 DEMOCRACY VERSUS SOCIALISM part iv
the life of modern Europe ; from the parental absolutism
of an early Roman or Teutonic housefather to the equit-
able relations between parents and children among the
Anglo-Saxon nations to-day ; from slavery and serfdom
to the free contract by which modern workers in com-
bination bargain for the conditions of their employment,
the upward march of mankind has been long and weary.
Distant as the goal of fullest freedom as yet is, the progress
of the past contains the promise of its attainment. Every
step in this upward progress is the sign of a preceding
advance in the adjustment of man's nature to the conditions
of social life ; every reduction of regulation from without
— of compulsory regulation — has been made possible by
the evolution of better regulation from within — self or
voluntary regulation.
Moreover, compulsory regulation does not tend to
disappear because it has become excessive, useless, and
injurious. The removal of excessive regulation, the attain-
ment of greater freedom, is always difficult, and frequently
entails great sacrifices on the part of the regulated. For
the regulating agency, like any other group of men, is
mainly actuated by self- regarding sentiments. Not the
performance of useful functions, but the maintenance of
its members, is its principal object. Therefore it uses all
its power to defend any of its component parts, regardless
of the question whether the functions performed by them
are necessary and beneficial or needless and detrimental to
the social organism. In every progressive community,
therefore, regulation from without is in excess of what
social wellbeing requires, and not more but less com-
pulsory regulation is a necessity of further progress.
Here also Socialism disregards the teaching of universal
history — runs counter to the course which the evolution
of human society has taken. Instead of aiming at less
regulation, it aims at more regulation ; instead of reducing
the coerciveness of regulation from without, it must increase
it. For the supersession of the unconscious and voluntary
co-operation of to-day by a system of compulsory co-
operation consciously directed by State agencies, involves
universal regulation of the most minute and despotic kind.
CHAP. Ill THE SOCIALIST STATE 291
Not without reason do socialists speak of " an industrial
army " as the type of organisation at which they aim. In
structure and in the sentiment animating it the industrial
organisation of Socialism must form a complete parallel to
the organisation of an army. There must be the same
graduated regimentation to convey orders and superintend
their execution, and there must be the same subordination
to secure the working of the machine. Unquestioning
obedience, being as necessary in the industrial army of the
socialist State as in the militant army, must, as in the latter,
be enforced with unyielding rigour.
Socialist writers and speakers, as a rule, are reluctant
to set forth their idea of the form which the organisation
of labour must take in the socialist State. They plead in
excuse of this reluctance that it is impossible to foresee the
exact character of an organisation which must change with
the changing conditions of industry. True as this plea is
with regard to the details of organisation, it is not true as
regards its type. Just as change in weapons, and other
conditions of warfare, while constantly altering the details
of military organisation, has left its type unaltered, so
changes in industrial conditions do not materially affect
the type of industrial organisation. For the type is deter-
mined solely by the object immediately aimed at, i.e.
whether general or individual benefit is the proximate
object. If, as is the case with Socialism, the general benefit
is consciously aimed at, industrial activities must be regu-
lated, as Socialism proposes to regulate them, by a central
agency — national for industries of national importance,
municipal for industries of merely municipal importance.
The number of the individuals and the extent of the
operations to be regulated then also impose a graduated
series of regulating agencies, culminating in the central
agency. Whether the subordinate regulative agencies
derive their authority from the central agency, or whether
their authority is derived from the same source as that of
the central agency — say popular election — or whether each
superior agency derives its authority from the agency im-
mediately below it by delegated election, will profoundly
affect the efficiency and strength of the whole organisation.
292 DEMOCRACY VERSUS SOCIALISM part iv
But as in every army, under all conditions of warfare, there
must be a central commanding agency which transmits its
orders through subordinate commanding agencies, and as
the efficiency of an army depends upon the blind obedience
of each subordinate agency, and of the soldiers which it
commands, to the dictates of the central agency, so must
the same regimentation and subordination prevail in the
industrial army of the socialist state, whatever the changing
conditions of industry may be.
The few socialist writers who have dared to picture
the industrial organisation which Socialism necessitates,
much as they differ in detail, agree in admitting this con-
tention. Laurence Gronlund describes it as follows : ^ —
" Appointments will be made from below. . . . Under
Socialism . . . the letter-carriers will elect their immediate
superiors ; these, we will say, the postmasters ; and these,
in their turn, the postmaster-general. . . . The workers
in a factory should elect their foreman ; teachers their
superintendent, etc. This is the only method by which
harmonious, loyal co-operation of subordinates with supe-
riors can be secured. No one ought to be a superior who
has not the goodwill of those he has to direct. Under-
stand also that appointment from below does not necessarily
imply removal from below. . . .
"Every directing officer should be responsible not
alone for the work he himself does, but also for the work
of his subordinates. He must see to it that they do their
work well. Is not this a sufficiently good reason why
every directing official should be given the right instantly
to dismiss any one of his subordinates for cause assigned,
inefficiency being, as already stated, the very best of causes?
When, then, a foreman was inefficient, he would be removed
instantly without trial by his superintendent ; he, again,
might be removed by his bureau-chief, perhaps for abuse
of power in removing the foreman ; this bureau-chief,
again, by his department- chief. . . . Suppose we make
every department-chief (head of a whole industry) liable
to removal by the whole body of his subordinates . . .
and that he be removed from office the moment that the
^ The Qhoperative Commomotalthy pp. 166-176. (The italics are Gronltind'i.)
CHAP. Ill THE SOCIALIST STATE 293
collective judgment of the whole department is known, if
that judgment is adverse to him. Then the bureau-chiefs
immediately elect another chief of department, who can be
removed in like manner if he should not suit the workers.
" Can the foreman also dismiss any of his workers for
inefficiency or other cause? . . . For such cases a trial
by his comrades might be provided, the issue of which
might be removal to a lower grade or some sort of com-
pulsion.
" Instead of any term of office long or short we shall
have a tenure during good behaviour y
The same author states : ^ " Do not, however, sup-
pose that there will be no subordination under the new
order of things. Subordination is an absolute essential of
co-operation ; indeed, co-operation is discipline."
Sir Henry Wrixon also furnishes valuable testimony
in this direction. He states : * —
"One of the ablest thinkers and advocates of the
socialist cause in England favoured me by giving me more
than one interview, at which he explained his opinions very
clearly. He said : * ... In the social State there must
be strict discipline ; the ranks of workmen would not be
allowed to elect their own heads ; they would only have
their vote for the general election of representatives.
The idle would be subjected to some form of penal
discipline.' "
The same author makes the following statement : ® —
" Mr. Sidney Webb, in a lecture, declared : * To
suppose that the industrial affairs of a complicated in-
dustrial State can be run without strict subordination and
discipline, without obedience to orders, and without definite
allowance for maintenance, is to dream, not of Socialism,
but of anarchism.' "
Equally decisive is the utterance of one of the fore-
most leaders of the social democracy of Germany, August
Bebel : *—
" After society has entered into exclusive possession of
all the means of production, the equal duty of all to labour,
^ The Cooperative Commcmvealtk, p. 148. ' Socialism^ p. 129.
* Uid, p. 21. * fFomariy p. 18 1. (William Reeves, London.)
294 DEMOCRACY VERSUS SOCIALISM part iv
without distinction of sex, will become the first funda-
mental law of the socialistic community. . . . Socialists
maintain that he who will not work has no right to eat.
But by work they do not understand mere activity, but
useful, i.e. productive work. The new society demands
that each of its members shall execute a certain amount of
work in manufacturing, in a handicraft, or in agriculture,
by which he contributes a given quantity of products for
the satisfaction of existing needs."
These authorities agree in declaring that necessity
of regimentation, subordination, and compulsion in the
socialist organisation of labour, which we deduced from
general principles. The ordinary worker, the vast mass
of the male and female population, would, therefore, be
exposed to conditions, uniform for all of them, and widely
differing from those of the average artisan even under
existing unjust social arrangements. For though the in-
dividual artisan does not enjoy any great independence, he
possesses in his union the means of bargaining for the con-
ditions under which he will work, and even in matters too
small for combined action, he can escape irksome condi-
tions, such as the chicanery of a foreman or employer, by
changing from one factory to another. Large sections
of the people — farmers, shopkeepers, professional men,
merchants, hawkers, and others, as well as most women —
carry on their labour without the supervision of any one,
and without the slightest industrial subordination. More-
over, within certain limits, every man is free to choose his
occupation, and the place of his abode, and all are free
from any outside compulsion with regard to the amoxmt
of labour which they desire to perform.
Under Socialism all this would be changed. The
determination by the central regulating agency of the
kinds, qualities, and quantities of commodities to be pro-
duced, involves of necessity the further determination of
the number of workers to be employed in each occupation,
and of the place where their labour may be most usefully
exercised. When the number of labourers required in
any occupation and place has been obtained, others must
enter such occupations and in such localities as the
CHAP. Ill THE SOCIALIST STATE 295
administration may decide. If, through any change in
demand, or in methods of production, the number of
workers in any occupation becomes excessive, the surplus,
which must be selected from the total number by officials,
must enter such other occupations and leave for such
other localities as the administration may decide. Further-
more, no youth can be allowed the choice of his occu-
pation, as otherwise some occupations would become
overcrowded, while others, equally necessary, would be
neglected. The administration, therefore, must decide
the occupation of every youth, male and female. Free-
dom of movement, the right of any one to choose his or
her place of abode and labour, as well as freedom of choice
with regard to the occupation which any one desires to
follow, would be absolutely abolished. Socialists, while
appearing to contest this conclusion, nevertheless fully
admit it. Thus August Bebel states : ^ —
"Every one decides for himself in which branch he
desires to be employed ; the large number of various
kinds of work will permit the gratification of the most
various wishes. If a superfluity of workmen occur in one
branch, and a deficiency in another, it will be the duty of
the executive to arrange matters and readjust the in-
equality."
The second sentence in the foregoing quotation
obviously contradicts the first, for if the executive is to
" readjust the inequality " arising from " a superfluity of
workmen in one branch and a deficiency in another," the
executive must have power to compel the superfluous
labourers to change their occupation, and if the deficiency
has arisen in another locality, to compel them to work in
this other locality. The second sentence, therefore, fully
admits the conclusion we have drawn. Gronlund in like
manner is forced to admit this contention, while endeavour-
ing to deny it. He states : ^ —
" It is, as we have stated, for the Commonwealth to
determine, in its character of statistician, how much of a
given product shall be produced the coming year or
^ August Bebel, ff^otiuui, p. 183.
' TAe Co'Optrative CommonweaitA, pp. 148, 149. (The italics are Gronlund*i.)
296 DEMOCRACY VERSUS SOCIAUSM part i v
season. . . . Suppose in a given industry production will
have to be narrowed down to one-half the usual quantum.
It follows that, in such case, the workmen can only work
half the usual time, and that there will only be one-half
the usual proceeds to be distributed among them.
*'What must be the result.? Evidently the men's
remuneration will have to be reduced one-half, or a
corresponding number of workers will have to pass over
to some other employment — for the consequences of such
disorder which may be permanent, and is not the result
of either miscalculation or misfortune, will certainly not
be borne by society at large ; and the Commonwealth,
while it guarantees suitable employment, can certainly not
guarantee a particular employment to anybody.
"A change of employment will, however, in that
Commonwealth be tolerably easy for the worker, on
account of the high grade of general education, and
because all will have passed through a thorough apprentice-
ship in general mechanics.
"Certain critics of Socialism object that no person
under it will have any effective choice in regard to
employment. The above shows how little foundation
there is for such criticism. But we should like to know
how much * effective choice ' the vast majority of men now
have in regard to employment, or wages, or place of abode,
or anything else." [^
Whether a change of employment, at the dictate of
some spiteful official, or as a disguised punishment for
opposition to the regulative agency, from, say the manu-
facture of optical instruments to the work of a navvy ;
from leader -writing on a governmental newspaper to
breaking stones ; or, for a woman, from teaching literature
to working at a power-loom or a spinning-mule, is " toler-
ably easy," as Gronlund asserts, appears to be questionable.
There can, however, be no doubt that if the State, having
abolished all competing employment, does not guarantee
the " particular " employment any one desires, but merely
"suitable" employment, i.e. suitable in the opinion of
some official or officials ; and if workers will have to
change the character and place of their occupation when-
CHAP. Ill THE SOCIALIST STATE 297
ever the administration deem it necessary, free choice of
occupation and abode is abolished.
This subjection to the will of the executive agency,
depriving the individual of the right to choose the place
of his labour, deprives him also of all power to escape
from specially onerous conditions of employment. For as
he must go from one factory to another if a superior
officer so decides, so he must remain in a given factory
unless he receives permission to transfer himself. He,
therefore, is unable to escape from the chicanery of local
officials, from the annoyances, injuries, and punishments
which may become his lot, should he have roused the ill-
will of any of his local superiors or of the administration
as a whole.
Moreover, equality of reward has as its necessary
corollary equality of service by both men and women, as
Bebel admits.^ But how is this equality of service to be
enforced? Apart from the difficulty of arriving at an
equation of effort in different occupations, how are all
men and women to be induced to do the amount of work
decided upon ? If the standard is fixed at a level suitable
to weak women, it will enormously reduce the productivity
of men's labour. If it is fixed so low as to suit the slowest
or laziest of workers, the productivity of the labour of all
superior workers will be reduced. If it is fixed higher
than this — ^as it inevitably must be — say so as to suit the
men of average industry, ability, and strength, most
women and many men will be unable to comply with it,
while others will be unwilling to do so. Are they all to
be compelled to work up to the standard of efficiency,
regardless of the question whether their failure results
from inability or laziness ?
Socialists generally avoid the discussion of these diffi-
culties, or escape from it by the unreasoning assertion that
there will be no weak or lazy members of the socialist
State. Thus Bebel writes : ^ —
'* And what becomes of the difference between the in-
dustrious and the idle, the intelligent and the stupid ?
There will be no such differences, because that which we
^ See quotation, pp. 293, 294. ' ff^omarij pp. 194, 195.
I
298 DEMOCRACY VERSUS SOCIALISM partiv
associate with these conceptions will have ceased to exist.
. . . As all will carry on labour under conditions of per-
fect equality, and each will be occupied with the kind of
work for which his tastes and faculties best qualify him, it
is evident that the differences in the quality of the work
done will be extremely small."
Even if it were the case, which it is not, that " each
will be occupied with the kind of work for which his
tastes and faculties best qualify him " or her, it would not
follow that the difference in the quality and amount of
work done would be " extremely small." For the differ-
ence in faculties, mental and physical, must result in
corresponding difference in the work done, and as the
former differences are great, so must the latter be. More-
over, those who have framed any conception of the slow
adaptation of individuals to the conditions of social life ;
those who see that even where all the advantages to be
reaped from conscientious work go to its performer, large
numbers fail to work conscientiously ; those who have
witnessed the shirking of work by members of co-operative
industrial undertakings and the consequent collapse of the
latter, — all these will hesitate to adopt the conclusion that
Socialism, i.e. working, not for their individual advantage,
but for that of the community, can produce such a sudden
transformation of character as to make all men and women
conscientious, industrious, and able.
Bebel himself states : ^ " He who will not work has no
right to eat," and it follows that he who works less than
his fellows has less right to eat, i.e. must receive less, or
must be compelled to work as much. The existing
organisation of industry, with all its faults, at least pro-
duces some measure of equality between service and
reward. The worker who is unable or incorrigibly lazy
is discharged, and the less able or less industrious workers
receive lower pay than their more able or industrious
fellows. This indirect coercion is not available in the
socialist State. Monopoly of employment by the State
and equality of reward render either discharge or reduced
pay impossible. Penal regulations, culminating inevitably
^ See quotation, p. 294.
CHAP. Ill THE SOCIALIST STATE 299
in personal chastisement, are the only means by which the
socialist State can enforce its labour regulations. The
prison and the knout, therefore, threaten all who,
regarded as capable of work by their official superiors,
are nevertheless unable or unwilling to perform the task
allotted to all alike.
The great mass of the population, all those who do
not form part of the regulating hierarchy, will be subjected
by Socialism to such regimentation, discipline, and com-
pulsion as prevails in militant organisations. The slow
and painful evolution which in the course of centuries has
rescued the masses of the people from such a state of sub-
jection ; which has created the comparative freedom for
which past generations have gladly ventured life and
fortune ; which, superseding authority by individual re-
sponsibility, has jrielded the opportunity for the moral
elevation of man, would thus be turned upon itself. Man
would again become part of a social mechanism which,
disregarding individual desires and aspirations, would sup-
press all individuality, personal initiative, and aspiration.
Not the misuse of the powers conferred upon the
regulative agency, but the conscientious exercise of such
power for social wellbeing, must inevitably lead to this
result. Whether such misuse will take place, and to what
extent, must, however, largely depend upon the control
which the regulated masses can exercise over the regulative
agency. The following chapter will, among others, deal
with this question.
CHAPTER IV
THE POLITICAL OUTCOME OF SOCIALISM
A GREAT landowner, attached to the sport of his youth,
brings to Australia a few pairs of rabbits, and within a few
years the plague of rabbits has half-ruined the landowners
of the country, while enforcing great expenditure to avert
total ruin. A settler, fond of water-cress, introduces the
plant in New Zealand, and before a generation has passed,
it has spread to an extent which threatens to choke water-
courses and rivers. A governor's wife, fond of Lantana
blossoms, brings a plant to Ceylon, where it spreads over
large areas of fertile land, making them useless for culti-
vation.
These examples of man's want of foresight and inability
to control the natural forces which he sets in motion might
be multiplied almost indefinitely. Still more numerous are
the examples of his inability to control the social forces
which he sets in motion, and his want of foresight regard-
ing their tendencies. Laws which approximately achieve
the objects for which they were passed achieve additional
results not aimed at ; and, with like frequency, laws fail
to achieve the object contemplated, while achieving other
and unexpected results.
Equally true it is, that governmental structures once
created have a tendency to escape control and to achieve
unexpected results. Like all other groups of men, those
forming governmental agencies judge of the general well-
being through their own, and desire to extend the func-
tions and power of the agency to which they belong. The
separation of their functions from those of the rest of the
CH. IV POLITICAL OUTCOME OF SOCIALISM 301
population produces a spirit of caste, and makes them
impatient of any control except that exercised by members
of their caste, while their separate interests are placed
before the general interest. At the same time, the gradu-
ated organisation and centralised authority of such agencies
enable them to persistently pursue their separate interests,
and to overcome the sporadic resistance of the unorganised
regulated masses divided by apparently conflicting interests.
The tendency of all such agencies to thus enlarge their
functions and escape from popular control, to convert
derivative authority into absolute authority, is universally
visible. It is shown no less in the rise of more or less
formally elective chiefs into hereditary and absolute kings,
or in that of humble deacons and presbyters into princes
of the church and popes, than in the power of party
machinery in the United States. For though the people
of the United States enjoy all the forms of control over
their several governments ; though popular election is stiU
the method of appointment to aD legislative and many of
the important administrative positions, it is nevertheless a
notorious fact that all real control by the people has been
lost. It has passed into the hands of an organisation
created for the purpose of causing popular control to be
exercised with efficiency — the party machine. The party
machinery, directed by an irresponsible and generally corrupt
person, the " boss," nominates the candidates for office in
towns, states, and union ; to the electors remains but the
inglorious and frequently distasteful task of ratifying the
nominations of one machine or the other. The organisa-
tion created for one end has achieved another and con-
trary end ; the servants of the people have become the
masters of the people.
The same tendency has made its appearance in the
great organisation of the Co-operative Stores, which
culminates respectively in the English and Scottish Co-
operative Wholesale Societies : —
" The Co-operative Stores of each district hold meet-
ings periodically to decide questions of business and policy.
In these district meetings the Wholesale Directors are
represented by two of their own number ; and with their
302 DEMOCRACY VERSUS SOCIALISM part iv
wider experience and central prestige they find it an easy
matter usually to control the local delegates. Nominally,
the Wholesale is under the control of the delegates chosen
by the societies which hold shares in it, and for whose
convenience it was constituted ; but, practically, I was
assured by its critics, popular control is gradually becom-
ing a mere name. The Central Government has become
so large that its own public cannot deal with it." ^
More instructive still are the difficulties which trade
unions experience in their endeavour to limit and control
the growing power of their elected officials. The testi-
mony of Mr. and Mrs. Sidney Webb is of peculiar value
on this point, not only on account of their exhaustive
study of trade unions, but also because they may be
regarded as unwilling witnesses to the despotism which
Socialism must engender. Dealing with the evolution of
trade -union organisation, they make the following state-
ments : 2 —
" It was assumed that everything should be submitted
to * the voices ' of the whole body, and that each member
should take an equal and identical share in the com-
mon project. As the union developed from an angry
crowd, unanimously demanding the redress of a particular
grievance, into an insurance company of national extent,
obliged to follow some definite trade policy, the need for
administrative efficiency more and more forced itself on
the minds of the members. This efficiency involved an
ever- increasing specialisation of function. The growing
mass of business and the difficulty and complication of the
questions dealt with involved the growth of an official
class, marked off by capacity, training, and habit of life
from the rank and file. Failure to specialise the executive
function quickly brought extinction. On the other hand,
this very specialisation undermined the popular control,
and thus risked the loss of the indispensable popular
assent. The early expedients of rotation of office, the
mass meeting, and the referendum proved, in practice,
utterly inadequate as a means of recovering genuine
* Henry D. Lloyd, Labour Co-Partmrship^ pp. 274, 275.
' Industrial Democracy^ pp. 59, 60, and 70.
CH. IV POUTICAL OUTCOME OF SOCIALISM 303
popular control. At each particular crisis the indi-
vidual member found himself overmatched by the official
machinery which he had created. At this stage irre-
sponsible bureaucracy seemed the inevitable outcome.
But democracy formed yet another expedient, which in
some favoured unions has gone far to solve the problem.
The specialisation of the executive into a permanent,
expert civil service was balanced by the specialisation of
the legislature, in the establishment of a supreme repre-
sentative assembly, itself undertaking the work of direction
and control for which the members at large had proved
incompetent. We have seen how difficult it is for a com-
munity of manual workers to obtain such an assembly,
and how large a part is inevitably played in it by the
ever-growing number of salaried officers. But in the
representative assembly these salaried officers sit in a
new capacity. The work expected from them by their
employers is not that of execution, but of criticism and
direction. To balance the professional civil servant we
have, in fact, the professional representative. . . .
*' How far such a development will . . . promote
collective action, and tend to increasing bureaucracy ;
how far, on the other hand, it will increase the real
authority of the people over the representative assembly,
and of the representative assembly over the permanent
civil service ; how far, in fine, it will give us that com-
bination of administrative efficiency and popular control
which is at once the requisite and ideal of all democracy, —
all these are questions which make the future interesting."
The preceding extracts show that Mr. and Mrs. Webb
are by no means certain that the measure which, they state,
has to some extent curbed the excessive and still-growing
power of the elective officials in some " favoured " trade
unions, will be equally effective in curbing the power of
the bureaucracy which Socialism will create. The follow-
ing considerations, showing that the doubt is more than
justified, censure the levity which regards as merely
'' interesting " a future replete with dangers : —
A trade union is a voluntary organisation which
men can join and leave without serious sacrifice. If a
304 DEMOCRACY VERSUS SOCIAUSM part iv
minority is dissatisfied with the conduct of the union's
affairs, they may leave in a body and create another union.
If, on the other hand, the malcontents form a majority of
the members, they can dismiss all existing officials and
elect new ones. Autocratic conduct on the part of
officials may all the more readily provoke this result on
account of the paucity of officials compared with the number
of members ; of the absence of any close and graduated
organisation comprising the officials of all unions ; of the
paucity of the officials' relatives and interested friends
among the members of the union ; of the absence of
official patronage and consequent inability to bribe or
terrorise numerous members.
The regulative agency which Socialism must create and
the relation between it and the regulated members of the
State contrast in all these respects with the regulative
agency of a trade union and its relation to the body of
members. A dissatisfied minority cannot possibly set up
a new state for itself, nor can it in any other way escape
the compulsion, and even aggression, of the regulative
organisation. Even the dissatisfaction of a majority
might, and probably would, be unable to curb its power.
For this regulative agency, exceedingly numerous, would
also be highly regulated and organised, and its full power
would be wielded from one centre. The influence and
power, even of existing bureaucracies, comparatively small
in number and restricted in functions, are only too visible
in such countries as France and Germany. The far greater
number and all-embracing functions of the socialist bureau-
cracy, therefore, must result in its yielding a vastly greater
power.
Nor is this all. A regulative agency grows at the
expense of the regulated. Every unit added to the former
is taken from the latter, and, adding to the aggressive
power of the regulators, weakens the resisting power of
the regulated. The transfer of power is, however, much
greater than the number of the transferred imits would
indicate. For not only is the transfer from an un-
organised body to an organised, but there are included
in the transfer the relatives and friends of the new officials
CH. IV POLITICAL OUTCOME OF SOCIALISM 305
whose sympathy and support still further strengthen the
official organisation.
Further still, this exceedingly numerous official class,
closely organised and centrally commanded, supported' by
still larger numbers of interested adherents among the
regulated, has absolute control over the population, the
land, the means of production, and of all available con-
sumption-goods. Wielding, on the one hand, an un-
exampled power of bribery, it, on the other, wields an
equally unexampled power of terrorism. Where grati-
tude for favours, past and to come, fails to silence the
expression of discontent, fear of vengeance might well
produce this result. For, as already pointed out, control
of production involves control of the producers. The
administration must have the power to shift workers from
one locality and occupation to other localities and occupa-
tions. What easier than to separate husband and wife,
parents and daughters, under the plea of industrial neces-
sity ? How will the malcontent resist, who is transferred
from an agreeable locality and occupation to a disagree-
able locality and exhausting occupation, when the ad-
ministration alone can judge of the necessity of such
transfer ?
Nor does even this exhaust the oppressive powers of
the socialist bureaucracy. Journalism and the production
of periodical literature generally, like every other occupa-
tion, must be carried on under its control. It is alleged
that a body of discontented individuals might join to
produce a journal expressing their opinions. No such
action, however, can be permitted, if the fundamental
principles of Socialism are to be maintained. For the
establishment of such a journal would be a return to the
" profit-mongering " system which Socialism is to displace.
The subscribers, owning the paper, would be in the posi-
tion of shareholders, and would receive the profit from the
venture, if any. If not they, but some one else owned the
paper, this owner would be the profit receiver. If this is
permissible with regard to a newspaper, why not in the
case of factories also ? Apart, however, from this con-
sideration, no journal hostile to the bureaucracy could
3o6 DEMOCRACY VERSUS SOCIALISM part iv
possibly maintain itself. Its machinery, paper, ink, type,
and all other requisites could not otherwise be obtained
than from State magazines. If the hostile paper were not
speedily extinguished through the constantly recurring
difficulties and delays in obtaining supplies which the
bureaucracy could create at will, other and more drastic
measures might easily scatter its producers and subscribers,
and thus end its existence. Thus the whole of the daily
and other periodical press would be under the absolute
control of the bureaucracy ; press criticism of its doings
would be impossible ; its misdeeds would be concealed
from all but those directly affected, while all news and
reflections would be " edited " to suit its purposes.
If it is suggested that, in the absence of an independent
press, combined public action can be promoted by means
of correspondence and secret personal agitation, it is over-
looked that the all - pervading power of the socialist
bureaucracy would again block the way. A powerful and
numerous bureaucracy, having representatives on every
farm and in every mine, factory, and workshop, would
inevitably know every disaffected individual, nor would it
hesitate to open and read their correspondence passing
through the post-office. The knowledge thus obtained
would speedily lead to the suppression of their correspond-
ence and to the administrative harassing of the writers
and addressees. On the other hand, the impossibility of
leaving the place of occupation without official permission
would prevent personal agitation elsewhere, while such
local agitation as might be attempted would be speedily
interrupted by shifting the principal agitators to distant
localities.
If, then, as we witness to-day in continental countries,
a comparatively small body of officials having a restricted
sphere of influence and only partial control over the press,
wielding also but small power of bribing or injuring
private individuals, possess nevertheless a formidable
power over the public whose servants they profess to be,
it is obvious that the far more numerous and coherent
socialist bureaucracy, actuated by common interests and
acting under one central authority, exercising unlimited
CH. IV POLITICAL OUTCOME OF SOCIALISM 307
powers of interference, of bribery and of intimidation,
controlling absolutely the whole newspaper press and what-
ever armed force there may be, would wield a power
absolutely irresistible to an incoherent and widely scattered
public, having no settled policy, no habits of united action,
and no means of communicating with each other.
To check and control such overwhelming power by
means of an elective assembly is an idle dream. As Mr.
and Mrs. Sidney Webb themselves point out, even in the
elective assemblies of trade unions which have been formed
to control their elected officials, " a large part is inevitably
played by the ever-growing number of salaried officers."
How can any one, aware of this fact, hope to prevent the
legislature of the socialist State being composed mainly of
officials or of unofficial nominees of the bureaucracy selected
for their devotion to the cause of the latter.? As the
power of the socialist bureaucracy would exceed that of
any existing bureaucracy, so must its influence with the
electors exceed that of the latter. How great that power
is, is shown no less by every election in Germany and
France than by Napoleonic plebiscites. An elective
assembly composed as that of the socialist State must be,
far from being a check on the power of the bureaucracy,
and the abuse of that power, would be the keystone in the
arch of bureaucratic absolutism.
If it is replied that France and Germany are not truly
democratic countries, the rejoinder is that a like state of
affairs prevails in the most democratic countries. It is
well known that the influence of the machine in American
politics is largely based on its co-operation with office-
holders and expectant office-holders. A still better object-
lesson is furnished by the Australian Colonies and
appeared most clearly during the general elections of
1894 in Victoria. A ministry, determined to reduce the
annual deficit by curtailing the number and salaries of a
somewhat excessive but by no means overpaid civil service,
appealed to the country. For the first time in the history
of the colony the public service, otherwise divided in
politics, unitedly and actively supported the opposition.
The result was a disastrous defeat of the ministerial party.
3o8 DEMOCRACY VERSUS SOCIALISM part iv
attributed by a general consensus of opinion to the active
opposition of the public service.
What is possible to a numerically small and compara-
tively uninfluential public service in a British colony would
be the merest child's play to a socialist bureaucracy. The
elective assembly would merely be a counterpart of the
bureaucracy in which the people who nominally elected it
would have no influence, just as election of the oflicials by
the people would fail to ensure their control over the
bureaucracy, as Mr. and Mrs. Webb admit.
Similar objections apply to another method, also
suggested by Mr. and Mrs. Webb : ^ —
" As miner, mechanic, or mill operative, the worker is
and must be the servant of the community. From that
service Socialism oflfers no escape. All it can promise is to
make the worker, in his capacity of citizen, the joint pro-
prietor of the nation's industry and the elector of the
head oflicers who administer it."
There are two methods of electing head officers ; one
is that the persons employed in each industrial department
elect the head officer of their industry, or that the whole
people elect the head officers of all industrial departments.
In either case a constituency spread over the whole country
would have to elect one or more candidates. In order that
a candidate may be elected he must be known to possess
the requisite qualifications, i.e, capacity and experience to
manage, not merely one factory, but all the industrial
establishments comprised in one department, say the textile
industries.
Such men are rare always, and under no circumstances
can they be found among the number of ordinary work-
men under Socialism. There may be some among them
who possess sufficient natural ability, but having occupied
no administrative post, they cannot possess, and still less
can they be known to possess, the requisite experience.
Such experience cannot be found outside the ranks of the
socialist bureaucracy. Some officials, having reached high
rank by long service, alone can be selected. The ideas
and interests of such men would be congruous with those
* S. and B. Webb, Problemt of Modern Industry ^ p. 275.
CH. IV POUTICAL OUTCOME OF SOCIALISM 309
of their fellow-bureaucrats, and a reform of the bureau-
cracy, therefore, cannot be expected from them. The
people may change their despots, but they cannot escape
despotism.
Suppose, however, the people, made reckless by
oppression, determined to risk all consequences and to
elect some ordinary workers in spite of their inexperience ;
candidates willing to brave the vengeance and honest
enough to withstand the bribery of the bureaucracy will be
difficult to find. But how are they to be found and their
trustworthiness made known throughout the vast con-
stituency ? Known within one factory, their names are
utterly meaningless anywhere else, and cannot be dis-
tinguished from those of the creatures of the bureau-
cracy whom the latter would put forward. For, as the
press is in the hands of the bureaucracy, as it can control
correspondence and all other means of communication, the
ordinary workers, as already pointed out, have no means
of organising combined action.
Not only, therefore, would the election of head oflicers
by the workers be a farce, but it would materially
strengthen the hands of the bureaucracy in making itself
absolute. The board of head officers, being elected by the
people, would derive its power from the same authority as
the legislature. Individually their power would have a
superior foundation to that of the legislators, as being
derived from a largely superior number of electors. Even
in the unlikely case of their confederates not controlling
the legislature, they would thus be in a better position to
fight and conquer the latter than if their authority were
derived from an inferior source than that of the latter.
Is there then no possibility of controlling the power of
the socialist bureaucracy in other ways ? An examination
of the several ways other than election for appointing
officials will show that there is no such possibility. The
first of these is the modification of elective appointment
by dismissal through superiors, suggested by Laurence
Gronlund.^ This modification must obviously destroy
the last vestige of control which the electors might retain.
^ See quotation, p. Z92.
3IO DEMOCRACY VERSUS SOCIALISM partiv
For, once appointed, the official would have to fear
nothing from his electors and everything from his
superiors, at whose mercy he would be placed. Abject
servility towards superiors, combined with insolent dis-
regard of the wishes and interests of the regulated masses,
would be the result. At the same time, the election of the
heads of departments, who would form the chief and
central authority, by their immediate subordinates, would
ensure the composition of this supreme authority by men
pledged to uphold the interests of the bureaucracy under
all circumstances. This proposal, therefore, offers no
escape from the dilemma in which Socialism finds itself.
An alternative method may be found in admission to
the service by competitive examinations, advancement by
seniority or by recommendation from superiors, dismissal
at the recommendation of a judicial board after trial, and
appointment of a central agency by the legislative assembly.
This method, however, is obviously unable to destroy
the homogeneity and power of the administration, nor
would it offer any guarantee against the misuse of that
power as long as the bureaucracy can influence popular
elections and the appointment of the judicial board.
The only other method is suggested in the Fabian
Essays} It is there stated : —
" I do not think that the direct election of the
manager and foremen by the employees will be found to
work well in practice or to be consistent with the discipline
necessary in carrying on a large business undertaking.
It seems to me better that the Commune should elect its
council — thus keeping under its control the general
authority — but should empower the council to elect the
officials, so that the power of selection and dismissal within
the various subdivisions should lie with the nominees of
the whole Commune instead of with the particular group
immediately concerned."
This method also overlooks the influence over the
election of the council which the numerous body of
officials would exercise. The selection of the officials by
an elective body is, moreover, a task for which such bodies
1 p. 158.
CH. IV POLITICAL OUTCOME OF SOCIALISM 311
are peculiarly unfitted, as the experience of Australia
proves ; would, considering the number of officials in the
socialist municipalities, offer serious difficulties to the
council of a municipality, and would be absolutely
impossible when all the innumerable officials conducting
State industries had to be selected by the elective assembly.
For such an assembly could not be conversant with the
capacity of the many thousands of applicants nor with the
requirements of the many thousands of posts to be filled.
The assembly would, therefore, be compelled to make
appointments at haphazard, or to merely sanction the
nomination of some other body conversant with the facts, i.e.
a body composed of superior members of the bureaucracy.
Socialism, therefore, possesses no means by which can
be controlled the Frankenstein which it must call into
being. What, then, would the socialist bureaucracy do
with the absolute power which it would wield ? That it
would use it sooner or later for the purpose of serving the
self-interest of its members cannot be doubted ; for the
units composing it will be of the average type, inclined to
selfishness and injustice. If it were otherwise, if all men
were just and unselfish, there would not and could not be
any injustice in the distribution of wealth, and the creation
of the vast machinery of Socialism would be obviously
unnecessary. Though socialists hold the irrational belief
that the compulsory system which they aim at will hasten
the ethical development of man, even those among them
who are least sanguine with regard to the time necessary
for the full development of the system, cannot seriously
entertain the hope that the interval will suffice for the full
adjustment of man to social conditions. Therefore the
regulative agency of the socialist State must be composed
of men who on an average are like to, or differ but little
from, the present average man. Such men, possessing
absolute control over the resources of a whole nation, will
sooner or later use these resources for their own advantage.
" The equality of distribution," " the equal reward of
labour," might be continued for the regulated masses, but,
in ways devious or open, the regulators would appropriate
for their own use a far larger than the average share. The
312 DEMOCRACY VERSUS SOCIALISM partiv
bureaucracy would live in Roman luxury, marked off in
startling ways from the correspondingly increased poverty
of the subject masses.
Furthermore, the love of offspring will not be
extinguished by any social rearrangement. Men will
still endeavour to secure to their children the same or
higher positions than they themselves occupy. Hence the
way of the socialist bureaucracy will be through nepotism
to hereditary succession. A carefully graded hereditary
caste, culminating in a hereditary despot, wielding absolute
power over a people reduced to monotonous and slavish
equality and deprived of all political and economic
independence, would be the inevitable result. How easy
it is to bring about such a revolution under democratic
forms when a powerful bureaucracy aims at it, may be seen
no less in the capture of nearly all the superior positions
in the French army by members of the old aristocracy
than in the coup d^etat of December 1851. Nor can it
be denied that the socialist bureaucracy would infinitely
exceed in power that wielded by the civil and military
bureaucracy of France.
Apart from and additional to these organised usurpa-
tions, there will inevitably arise unorganised aggressions,
which, prompted by the dishonesty, selfishness, and evil
passions of individual officials, would nevertheless be
shielded by the whole bureaucratic organisation. The
inevitable spirit of caste pervading every organised bureau-
cracy would be strengthened by still more powerful
motives when the inevitable corruption had made sufficient
way. At present, a male worker having incurred the
enmity of foreman or manager, or a woman persecuted
by the unwelcome attentions of one of them, may escape
the consequences by changing his or her place of labour.
No such evasion would be possible under the socialist
regime, and even if, by official transfer, a man or woman
escaped from the rod of a particular tyrant, nothing would
be easier than to so mark his or her papers as to expose
them to the like tyranny of new superiors. No man's
life and liberty, no woman's honour, would be safe from
the rancour or desires of officials.
CH. IV POLITICAL OUTCOME OF SOCIAUSM 313
The experience of the United States may again be
cited in illustration of this danger. Out of the vast mass
of available material I select one — the misuse of their power
by the police of Chicago, a misuse which is fully equalled
in other cities of the Union. The constitution of this
force rests upon a democratic basis. The Mayor is elected
by universal suffrage. He appoints the Chief of Police,
who, in ;his turn, appoints the officers and men of the
force. The Chief can be dismissed by the Mayor at any
time, and, in his turn, can dismiss officers and men for
cause shown. The whole force is thus placed as much,
and more, under the control of the electors as if every
police officer were directly chosen by them. Yet not only
is this force generally regarded as corrupt, but it uses its
power with absolute disregard of law, decency, and fair-
ness to the poorer electors, as the following account will
show. It is taken from a pamphlet^ published by Mr.
John P. Altgeld, Governor of Illinois, in which state
Chicago is situated : —
" There had been labour troubles, and in several cases
a number of labouring people, guilty of no offence, had
been shot down in cold blood by Pinkerton men, and
none of the offenders were brought to justice. The
evidence taken at coroners* inquests and presented here
shows that in at least two cases men were fired on and
killed when they were running away, and there was, con-
sequently, no occasion to shoot, yet nobody was punished ;
that in Chicago there had been a number of strikes, in
which some of the police not only took sides against the
men, but, without any authority of law, invaded and broke
up peaceable meetings, and in scores of cases brutally
clubbed people who were guilty of no offence whatever."
Mr. Altgeld supports this latter statement by citing
the summing-up of Judge McAllister in the case of The
Harmonia Association of Joiners versus Brenan et al., as
follows : —
" The facts established by a large number of witnesses
and without any opposing evidence are, that this society,
having leased Turner Hall for the purpose, held a meeting
^ Rtatom for pardoning Fie/den^ Netht^ and Schwab,
314 DEMOCRACY VERSUS SOCIALISM partiv
in the forenoon of said day in said hall, composed of from
200 to 300 individuals, most of whom were journeymen
cabinetmakers, engaged in the several branches of the
manufacture of furniture in Chicago ; but some of those
in attendance were the proprietors in that business, or
delegates sent by them. The object of the meeting was
to obtain a conference of the journeymen with such
proprietors, or their authorised delegates, with the view
of endeavouring to secure an increase of the price or
diminution of the hours of labour. The attendants were
wholly unarmed, and the meeting was perfectly peaceable
and orderly, and while the people were sitting quietly,
with their backs to the entrance hall, with a few persons
on the stage in front of them, and all engaged merely in
the business for which they had assembled, a force of
from fifteen to twenty policemen came suddenly into the
hall, having a policeman's club in one hand and a revolver
in the other, and making no pause to determine the actual
character of the meeting, they immediately shouted, * Get
out of here, you . . .,' and began beating the people with
their clubs, some of them actually firing their revolvers.
One young man was shot through the back of the head
and killed. But to complete the atrocity of the affair
on the part of the officers engaged in it, when the people
hastened to make their escape from the assembly room,
they found policemen stationed on either side of the
stairway leading from the hall down to the street, who
applied their clubs to them as they passed, seemingly with
all the violence practicable under the circumstances.'*
Another instance of similar conduct, supported by
numerous affidavits, is thus summed up by Governor
Altgeld : —
"There was a strike on the West Division Street
Railway, and some of the police, under the leadership of
Captain John Bonfield, indulged in a brutality never
equalled before ; even small merchants standing on their
own doorsteps and having no interest in the strike were
clubbed, then hustled into patrol waggons and thrown
into prison on no charge, and not even booked. A petition,
signed by about 1000 of the leading citizens living on
CH. IV POLITICAL OUTCOME OF SOCIALISM 315
and near West Madison Street, was sent to the Mayor
and City Council, praying for the dismissal of Bonfield
from the force, but on account of his political influence
he was retained."
When such brutal and illegal conduct on the part
of officials, appointed by the election of the people, can
go unpunished under existing conditions in the United
States, where the bureaucracy is not numerous and power-
ful, how can it be prevented under the conditions which
Socialism will create? Even prominent advocates of
Socialism have some slight perception of this danger,
as is shown in the following statement made by Mr.
and Mrs. Sidney Webb : ^ —
"Though it may be presumed that the community
as a whole would not deliberately oppress any section
of its members, experience of all administrations on a
large scale, whether public or private, indicates how
difficult it always must be, in any complicated organisa-
tion, for an isolated individual sufferer to obtain redress
against the malice, caprice, or simple heedlessness of his
official superior. Even a whole class or grade of workers
would find it practically impossible, without forming some
sort of association of its own, to bring its special needs
to the notice of public opinion and press them effectively
on the Parliament of the nation. ... In short, it is
essential that each section of producers should be, at
least, so well organised that it can compel public opinion
to listen to its claims, and so strongly combined that it
could, if need be, as a last resort against bureaucratic
stupidity or official oppression, enforce its demands by
a concerted abstention from work."
The suggestion that aggrieved individuals might, " as
a last resort against bureaucratic stupidity or official
oppression," enforce their claims " by a concerted absten-
tion from work," startlingly exhibits the want of com-
prehension, from which all socialists appear to suffer,
of the concomitant changes in social conditions which
the establishment of Socialism must engender. For how
are men to declare and maintain a strike in the face of
^ Industrial Democracy ^ pp. 8z4, 825.
3i6 DEMOCRACY VERSUS SOCIALISM partiv
a bureaucratic power such as Mr. and Mrs. Webb them-
selves deem it possible to arise imder Socialism ? Apart
from direct punishments, which might easily be inflicted
for such an act of insubordination, how are the strikers
to maintain themselves for a single week ? All supplies^
food, clothing, materials for heating and cooking, and the
many other daily requirements of a household, are in the
possession of the bureaucracy. The bureaucracy would,
therefore, have no difficulty in practising BebeFs maxim,
that " he who will not work has also no right to eat."
A mere mandate to refuse supplies to the strikers and
their dependants would either enforce immediate sub-
mission, or would end the trouble of officialdom by the
speedy death of the strikers.
The ultimate social and political outcome of Socialism,
therefore, must be an all-pervading despotism on the part
of the rulers, and a degree of slavery on the part of the
ruled masses, such as has not existed in Europe even
during the worst times of Roman and mediaeval oppres-
sion. The slavery which accompanied Communism in
ancient Peru would be reproduced, in an aggravated
form, among the nations of Europe. Inevitably the
time would come when, all initiative, all individuality,
and patriotism having been crushed out, a catastrophe,
like that which destroyed the Inca state, would overwhelm
the nation, forming, perhaps, the starting-point of a new
evolutionary process, by which, through a like apprentice-
ship as that of the last thousand years, the people might
re-arrive at the point at which they now stand, and
choosing a worthier course, would enter upon the road
to a wider and truer freedom, from which Socialism
endeavours to seduce them.
CHAPTER V
THE INDUSTRIAL OUTCOME OF SOCIALISM
The socialist organisation of industry, substituting State-
regulation for self - regulation, compulsory co-operation
for voluntary co-operation, equal reward for reward
according to service rendered, must also rely upon other
motives for exertion than those prevailing under a system
of universal contract.
The motive, and only motive, for industrial exertion is
the desire to enjoy its fruits. If men could satisfy their
material desires without industrial exertion they would not
undergo such exertions. Likewise would they abstain if
all reward were withheld from them. When men receive
as a reward the full result of their mental and physical
industrial exertions, the motive for such exertion is
strongest. It becomes less active as a greater part of the
result of their exertion is withheld from them. The
efficiency of labour, therefore, other things being equal,
is dependent upon the system of distributing the results
of labour. In so far as this system is unjust ; in so far as
the reward of one falls short of the services rendered by
him, and the reward of another exceeds the value of his
services ; in so far it must also reduce the efficiency of
labour. For the men who are uncertain whether their
exertions will meet with their due reward, and still more
those who are certain that their due reward will be with-
held, will not exert themselves to the fullest extent and
their labour will fall short of its fullest efficiency. Still
more will this be the case with those who expect or know
that their reward will not be substantially affected if they
31 8 DEMOCRACY VERSUS SOCIALISM partiv
fail to labour efficiently. This divorce between exertion
and reward is one of the main reasons for the universally
recognised inefficiency of serf and slave labour. The
existing system, suffering from injustice in distribution,
largely reduces the efficiency of labour. Under Socialism,
however, the reduction in efficiency must be very much
greater. For though under the existing system the great
majority receive rewards of less value than that of the
services rendered by them, yet this reward generally falls
and rises with the value of their services. The motive for
exertion, while lessened, is not rendered inactive. Under
Socialism, postulating equal rewards for unequal service,
however, this motive would cease to exist. As no one
could hope to increase his reward by increased mental and
physical exertion, so no one could fear to lessen his reward
by reduced exertion. Labour would, therefore, become
infinitely less efficient than it is under existing conditions.
Socialists urge two replies to these arguments. They
contend that the desire for material reward is not the only
motive for industrial exertion, and that self-interest will
continue to stimulate individual exertions under a system of
equal rewards.
In support of the first contention, they cite the conduct
of soldiers, who, though no material reward may await
them, yet eagerly contend for the immaterial reward which
valorous conduct brings. There is, however, no analogy
between exhibitions of valour and industrial exertion.
Other things being equal, the most courageous soldier is
also the most popular with his comrades. If cowardice
were admired as courage is, few would be guilty of acts of
exceptional courage. Even if it were admitted that, under
Socialism, exceptional exertion in industry would secure to
him who habitually exhibits it as much admiration as acts
of valour do now, the motives for exertion would still be
largely reduced. For such popularity can and always
would coexist with justice in distribution, and the expecta-
tion of increased material reward is, therefore, an additional
motive to the expectation of popularity. As one is less
than two, the withdrawal of the former motive must lessen
the inducement to exertion by at least one-half, even if it
cHAP.v THE INDUSTRIAL OUTCOME 319
were admitted that In Its absence popularity would attend
exceptional exertions.
Exceptional exertion, however, fails to secure popularity
In the absence of justice in distribution. Among clerks In
Government offices, he who earnestly strives to fulfil his
duties, who wastes no time and renders the greatest
service, is, as a rule, unpopular with his colleagues. This
trait is still more pronounced among industrial labourers.
In the gang system, prevailing In American boot-factories,
the quickest workman is placed at the head of the gang,
and the succeeding ones must keep pace with him or the
material accumulates before them. This man, far from
being popular, is generally the most unpopular. The
reason Is, that his greater exertion imposes a like increase
of exertion upon his fellows without any addition to their
wages. This rule holds good throughout. The more
efficient workmen are generally unpopular with their fellows,
because their presence raises the standard of efficiency ex-
pected from all without addition to their reward.
Under Socialism this tendency would be much stronger,
unless, as some socialists assert, self-interest will continue
to induce increased exertion under their system of dis-
tribution. This, the second contention alluded to, is,
that, as the reward of each is determined by the total
divisible product of all labour, this reward, though equal
with that of all others, is nevertheless affected by the
amount which the labour of any Individual contributes to
the common stock. If, for Instance, the number of those
amongst whom the social labour product Is divisible is
one million, then the reward of an Individual labourer Is
augmented by the one-millionth part of the product of
any Increased exertion he may undergo.
This argument admits, what socialists elsewhere deny,
the Importance of self-interest as a motive for industrial
exertion. For if, as this argument alleges, the receipt of
an Infinitesimal part of the produce of his exertion is
sufficient to stimulate every labourer, how much more
stimulating must be the certainty of receiving all of it.
An individual worker who, under Socialism, must divide
the product of his additional exertion with millions of
320 DEMOCRACY VERSUS SOCIALISM partiv
others, cannot from this knowledge derive as much induce-
ment to additional exertion as if he individually obtained
the whole. Nor can his conduct be afFected by the ex-
pectation that the special exertion of all others will equally
swell his reward and that of each of them. For the
individual worker does not know whether all the workers
in the same factory are exerting themselves equally with
him. Still less do the workers in one factory possess such
knowledge with regard to the workers in other similar
factories, or the workers in one department of industry
with regard to all the workers in all other departments.
The tendency, therefore, will be in the opposite direction,
and disregarding the possibility of obtaining a share of the
product of the additional exertions of others, each worker
will only see the share which he contributes to the reward
of others.
Under Socialism, thferefore, still more than under
the existing system, every worker would exert him-
self as little as possible. Any workers who were to put
forth greater exertions than the majority of their fellow-
workers would become unpopular, because their example
would raise the standard of exertion which foremen and
managers would expect from all. Not only would the
motive for exertion arising from coequal reward be
absent, that of self-interest, but there would also be
absent the other motive which socialists want to substitute
for it, the approval of fellow-workers. On the contrary,
self-interest would cause efficiency to be regarded with
disapproval.
The only substitute for voluntary co-operation is com-
pulsory co-operation. Where men cannot hope to receive
an increased individual reward for increased exertion, the
only alternative, capable of inducing exertion, is compulsion.
Fear must take the place of hope ; sullen resentment that
of cheerful anticipation ; distaste for exertion that of joy
in the work produced. The feelings and opinions of the
slave-gang, cowering under the lash of a driver, must dis-
place all other motives to exertion, and the efficiency of
labour under Socialism must sink to the inefficiency which
is the universal attribute of slave-labour.
cHAP.v THE INDUSTRIAL OUTCOME 321
The factors which thus tend to reduce to the lowest
ebb the efficiency of the regulated labourers would like-
wise tend to reduce the efficiency of the regulating
organisation.
All experience proves that industries are most efficiently
conducted by individual undertakers. Where associations
of capitalists, acting through paid managers, conduct in-
dustries, the efficiency of management is generally impaired.
Where the industry, so conducted, is based on a monopoly,
the loss of efficiency is still greater, and it is most serious
in industries conducted by governmental agencies.
Various reasons account for these differences in
efficiency. The individual undertaker is stimulated to
the greatest mental and physical exertion by the know-
ledge that his income will vary with the efficiency of the
services rendered by him, and by the fear that competitors,
rendering more efficient service, wiU deprive him of part or
the whole of his income.
The manager of a public company, whose income
varies less directly and fully with variations in the efficiency
of the services which the company renders, is under the
domination of this motive to a smaller extent. Never-
theless, inasmuch as the directly interested shareholders
watch his conduct through some of their members, the
board of directors, the manager's exertions are stimulated
to some extent through hope of additional reward and fear
of loss of position and reputation.
Where an industry is based on monopoly, the income
of the company conducting it does not necessarily vary
with the efficiency of the services rendered by it. Such
companies as, for instance, railway and tramway companies,
may even increase their net earnings by rendering service
of less efficiency. Hence the pressure of shareholders and
directors on the managers in the direction of efficiency is
either reduced, or absent, or pressure in the direction of
less efficiency is substituted.
When an industry is conducted by a governmental
agency, no one is directly dependent for his income upon
the efficiency of the services which the industry renders.
The main motive stimulating mental and physical exertion
Y
322 DEMOCRACY VERSUS SOCIALISM part iv
in the conduct of industries owned by private individuals
and public companies being thus withdrawn, the manage-
ment, almost invariably, becomes least efficient.
Other causes co-operate in producing these variations
in efficiency. Where one or more individuals, directly
affected by the result, supervise the conduct of an in-
dustry, personal initiative is least fettered and great
flexibility possible. The wishes of individual clients can
be easily responded to, new situations can be met quickly
and easily, and the industry can adapt itself to changing
conditions with the least friction.
When an industrial undertaking is so large as to
require an extensive and graduated managerial organisa-
tion, much of this flexibility and adaptability is lost.
Fixed rules, limiting the authority and prescribing the
action of every unit in the organisation, must be substi-
tuted for personal initiative. Each grade in the regulative
machinery is more or less fettered ; the lower grades
cannot grant unusual requests or adopt new methods
without applying for permission to officers of superior
grade ; these again transmit the request to still superior
officers ; and invariably practice, more or less, takes the
place of flexibility.
This graduation, limitation, and inflexibility is greatest
where an industrial undertaking forms merely a part of a
still wider graduated organisation. For where this con-
dition exists, the ultimate decision rests with officials
generally possessing no personal knowledge of the cir-
cumstances which induce the proposals of subordinates.
Unwillingness to accept responsibility on the advice of
subordinates, therefore, generally leads to the rejection of
their proposals ; and even when they are adopted, the
unavoidable delay frequently retards action till the con-
ditions it was to meet have again changed. Invariable
routine, involving great loss of efficiency, therefore, is the
almost universal attribute of industries, the regulative
agency of which forms part of the general governmental
agency.
These two causes combine to reduce the efficiency of
governmental industrial undertakings to the lowest level,
CHAP. V THE INDUSTRIAL OUTCOME 323
even when, as at present, they are exposed to comparison
or competition with similar private undertakings of
greater efficiency. When, however, all industries are
conducted by the State, when even this last stimulus is
withdrawn — when, moreover, the regulative agency is no
longer exposed to the stimulating influence of criticism in
Press and Parliament, — the loss of efficiency in management
must be infinitely greater than that exhibited by govern-
mental industrial undertakings at the present time.
Another factor must add to the loss of efficiency by
both the regulated and the regulators. Labour is most
efficiently performed when it accords with the innate
tendencies of the labourer. A youth may make an
excellent teacher when he would make but a wretched
miner or bootmaker; another would render far more
valuable services as a farmer than as an engraver ; still
another would make an excellent business manager or
engineer, but a very bad physician. Under the existing
system, the number of those who, having special aptitude
for one occupation, are nevertheless compelled to enter
other occupations, is very great. A still larger nimiber,
however, either from the start or ultimately, enter upon
the occupations for which they are specially adapted.
Under Socialism, however, special aptitude can be but
rarely considered. Choice of occupation by the aspirants
being impossible, it is equally impossible for the regulative
agency to discover the special aptitude of the numerous
aspirants for employment. A few possessing influence
may obtain access to occupations which they prefer. The
great majority, however, must accept the occupation to
which they are allotted, and from which they may be
transferred to any other as the necessities of the State or
the caprice of officials may decide. With a few and
accidental exceptions, special aptitude will thus be
neglected, and men capable of doing exceptionally efficient
work in one direction will be compelled to work in other
directions in which their labour is specially inefficient.
The loss of efficiency hence arising — a loss the magnitude
of which is appalling — must be added to the loss arising
from the causes previously dealt with.
324 DEMOCRACY VERSUS SOCIALISM part iv
Yet another cause must tend in the same direction.
The efficiency of the national labour is largely determined
by that of the available instruments of production and
their amount. These instruments, made by labour, must
be replaced by labour. Every year large deductions are
made from the amount of consumption-goods otherwise
available, by setting labour to produce production-goods,
the fruits of which may not ripen till many years hence.
This production of capital, ever increasing and providing
for wants of an ever later date, is one of the functions
which our society performs unconsciously. Under Social-
ism it would have to be performed consciously. The
regulative authority would have to determine each year
how much of the national labour shall be employed in the
replacement and extension of national production-goods.
The labour thus employed is withdrawn from the pro-
duction of goods which can satisfy wants in the near
future, and directed towards the satisfaction of wants
which may arise in the distant future. A large and ever-
increasing deduction is made from the national dividend
becoming divisible in any year, in order to increase the
dividend which may become divisible in distant future
years. Will the officials be anxious to sustain such a
far-sighted policy, and will the people welcome it ? The
probability is ail the other way. The majority of any
people are short-sighted and improvident, unwilling to
renounce present enjoyment for future enjoyment. Still
stronger is this tendency when the abstention from present
enjoyment is not manifestly to their own incUvidual
advantage and that of their children. Those who are
improvident will desire the largest possible dividend from
the national labour in order to enjoy it. Those who arc
provident will desire the same in order to increase their
individual savings. A large deduction from the national
dividend for the adequate replacement, and still more for
the extension, of the national capital will, therefore, be
extremely unpopular with the large majority. Similar
sentiments animate the official hierarchy, which, moreover,
would derive no immediate and personal benefit from an
action which, nevertheless, would expose it to great un-
CHAP. V THE INDUSTRIAL OUTCOME 325
popularity. Hence must arise a tendency, not only to
abstain from adding to the national capital and to the
length of productive processes, but to actually curtail the
replacement of national capital and to reduce the length
of productive processes, and, consequently, to a further
reduction in the efficiency of the national labour.
Four powerful causes thus co-operate to reduce the
efficiency of labour under Socialism. They are : — The
withdrawal of all motive for mental and physical exertion
in production when reward is divorced from the value of
the service rendered. The substitution of compulsory
co-operation for voluntary co-operation. The neglect of
special aptitudes, and the reluctance to extend, if not the
desire to shorten, processes of production.
The inevitable result of reduced efficiency is a re-
duction of the amount and a lowering of the quality of
goods and services produced. As already pointed out,^
equality of reward and the determination by the regulative
agency of the kinds and quantities of goods to be
produced by the national labour, must inevitably lead to
an enormous reduction in the kinds and qualities of goods
produced. The tendency must be to confine production
to as few designs, colours, and qualities of every kind of
goods as practicable, and to make these permanent. The
tendency towards monotony and uniformity thus arising
would be supported and strengthened by the falling-off in
production due to inefficiency. As labour becomes less
productive, the production of goods required for comfort
and for ornamentation must be curtailed, and labour must
be concentrated upon the production of bald necessaries.
With every further loss of efficiency this process must be
extended, until the national dividend, receivable by every
citizen, will consist of a smaller amount and variety of
goods and services than is now at the command of average
artisans. Not only monotonous uniformity, but general
poverty, is thus the inevitable result of Socialism. Equality
of income will be achieved at least among the regulated
masses. But it will not be done by raising the income of all
to a level above that enjoyed by the great majority of the
1 Part IV. chap. ii.
326 DEMOCRACY VERSUS SOCIALISM part iv
people to-day. On the contrary, the income of all will be
reduced to the level of that which is now the lot of those
whose condition appeals most strongly for relief. Instead
of raising the material condition of this unfortimate
minority, Socialism must lower to their level the material
condition of all. A monotonous equality in unavoidable
poverty will be the condition of the whole people in the
socialised State.
1
CHAPTER VI
THE FAMILY UNDER SOCIALISM
Race-preservation entails the subordination of the life
of the individual to that of his offspring. In many of the
lower forms of life this subordination is carried so far, that
parental life ceases with the act of reproduction. During
the course of the evolutionary process, however, the drain
on parental life decreases, mainly by substituting post-
natal care of offspring for stupendous fertility as a means
of securing the continuance of the species. Post-natal
care of offspring, moreover, involving the satisfaction of
parental love, affords compensation for parental sacrifices.
Among the most highly evolved animals, therefore, an
approximate reconciliation is reached between individual
interests and the interest of the species, through a great re-
duction in the drain on parental life, and in the compensation
afforded by the experience of vividly felt parental pleasures.
In the human race the reconciliation between the life
of the individual and the life of the race is carried still
further, and it culminates in the most highly evolved
races of men. Among savages parenthood begins at an
early period ; mortality of children is great and is
compensated for by many births ; the life of individuals is
but little prolonged beyond the reproductive period ; and
parental pleasures are enjoyed only for a comparatively
short time. Among the most highly civilised races, on
the other hand, the period of life preceding reproduc-
tion is most prolonged ; mortality during childhood and
adolescence smallest ; the number of births fewest ; the
period of life following cessation of reproduction longest ;
328 DEMOCRACY VERSUS SOCIALISM partiv
and the companionship of parents and children being
longest, parental pleasures are enjoyed during a longer
period and with greatest intensity. It follows that the
highest ethical and sociological relation of the sexes is that
which ensures the continuation of the race with the least
sacrifice of parental life to the lives of progeny, while
affording the greatest satisfaction of parental love.
The regular relations between the sexes among civilised
nations and the corresponding sentiments are a result ot
evolution. Among the lowest savages these relations are
unregulated and promiscuous. Chastity of either males
or females is not valued ; and even when the possessory
instinct causes men to place a restraint on the women
appropriated by them, they easily give their consent
to temporary cohabitation with other men. As higher
types of human society evolve, marital relations become
more definite, and chastity, at least of females, comes to
be valued. Among the highest types, the marital relation
has become most definite and permanent, chastity has
come to be regarded as a cardinal virtue in females, and
its absence is beginning to be despised in men. Prepress
towards higher types of human society is thus inseparably
accompanied by progress towards higher — more definite
and permanent — marital relations.
At the same time, these relations have grown more into
accordance with the recognition of equal rights. Poly-
andry grants a licence to women which it denies to men,
polygamy grants to men a licence which it denies to women.
Monogyny alone recognises the equal rights of the two sexes.
The evolution of higher animal types is dependent
upon the growth of parental feelings and the consequent
prolongation and intensification of parental care. In the
human race parental care is more elaborate and prolonged
than in any animal species, and grows more elaborate and
prolonged with every advance in type. Among the highest
races it not only embraces the children while they reside
in the parental home ; not only employs complex agencies
for physical and mental culture and moral discipline, but
it follows children into the world and provides them ynth
means for material wellbeing. With this elaboration and
cH.vi THE FAMILY UNDER SOCIALISM 329
prolongation of parental care, the outcome of a greater
intensity of parental love, there arises filial and fraternal
attachment and love. Unknown among animals, feebly
developed and short of duration among savages, filial and
fraternal love and the consequent care of aged parents, of
sisters and brothers, becomes gradually stronger as higher
types evolve from lower, until among the most highly
evolved members of the highest types of men it blossoms
into lifelong gratitude and ardent filial and fraternal de-
votion.
The parental, marital, filial, and fraternal relations, thus
binding together several generations, are sources of the
greatest and purest happiness. Resting, not upon self-
love, but upon the love of others, the happiness experienced
by each is derived from the happiness conferred upon
others. The greatest sum of human happiness, therefore,
arises from those marital relations which, most closely
and permanently uniting the lives of husband and wife,
parents and children, secure the continuation of the race
with the least nimiber of births.
The marital relation which most efficiently subserves
these objects is the permanent, monc^ynic relation, which,
as a consequence, is that of all the highest types of human
society. The permanent and exclusive companionship of
one man and one woman, resulting in common interests,
sentiments, and tastes, and involving mutual sacrifices,
continuously intensifies the marital affections. Their
common love for their joint children reflects upon the
feelings of the latter and binds them together into fraternal
affection. The absence of the jealousies and contentions,
inseparable from polygynic unions, intensifies marital,
parental, filial, and fraternal affections. The care of
children being permanently assumed by both parents, both
secure the largest measure of satisfaction of parental love,
while securing the wellbeing of the children more efficiently
than if, as in temporary unions, it devolved upon one
parent alone. As a consequence, the mortality of children
is reduced and a smaller number of births suffices to ensure
the continuation of the race.
Socialism, modifying, to a considerable extent, the
330 DEMOCRACY VERSUS SOCIAUSM part iv
permanent monogynic relation of the sexes, must in this
and other ways alter the constitution of the family, and,
therefore, must lead to retrogression in this, the most
important, as in other spheres of social life. As shown in
Part I. chapter vi., among its immediate results are : the
economic independence of women ; the abandonment of
separate family homes and the early separation of children
and parents, and the transference of the former to the
care of the State. The further results following upon
these profound modifications of the constitution of the
famUy must now be examined.
The separation of children from parents at a tender
age destroys the opportunity for the development of
parental love, which grows upon the daily and hourly
self-sacrifice which the care of young children demands.
Still more must it destroy the opportunity for the develop-
ment of filial and fraternal affections. The greatest and
purest opportunities for happiness must thus be destroyed
by Socialism.
The loss of this happiness must be accompanied by
the loss of ethical training and sentiments of the highest
order. The care of children, involving constant sacrifices
of self-regarding desires, affords the highest training in
altruistic sentiments. Hourly and daily the parents, and
especially the mother, must subordinate their egotistic
pleasures to the welfare of their children. This train-
ing in self-sacrifice, this evocation of unselfish emotions,
influences the character of the race and, accumulating in
influence from generation to generation, originates and
furthers altruistic sentiments in other social relations. At
the same time, the ethical standard is still further raised
by the influence which such self-sacrifice and the general
purity of the home-life exercises upon children. The
constant experience of and training in unselfish actions
strengthens the altruistic sentiments hereditarily derived,
and the love and reverence of sons for mothers and sisters
is the foundation of the respect for womanhood in
general.
As parental love is the source of all altruistic senti-
ments and emotions, so does the care of parents for children
cH.vi THE FAMILY UNDER SOCIAUSM 331
afford the highest training in altruism. Not only would
the further evolution of dtruistic sentiments be hindered
by the early surrender of children to the State, but the
individual training in altruism would also cease. The
altruistic sentiments, which, however deficient as yet, have
nevertheless made great progress, would thus gradually
be lost again, and there must rise such selfishness as would
ultimately threaten the very existence of human society.
Just as higher types of human society have arisen through
the better discharge of parental responsibilities, so must
the non-discharge of such responsibilities by parents lead
to the re-evolution of lower types, to the decadence of the
human family into mere animalism.
Another consequence must arise. The bearing of
children, connected as it is with physical restraint and
intense suffering, is undergone reluctantly by all women.
The only compensation for the sacrifices involved, the
only consideration which makes it acceptable to women,
is the expected satisfaction of the maternal sentiment from
the loving care for the new-born child. Will maternity
be accepted with like willingness when this compensation
is withdrawn ; when the new-born babe is taken from its
mother after a few weeks or even months ; when during
the agony of parturition the mother looks forward to the
further agony of losing her child ? That under such cir-
cumstances women will be willing to take upon themselves
the suffering and sacrifices involved in the bearing of
children seems unlikely. Under Socialism, therefore, the
birth-rate is certain to contract, and in all probability will
contract to an unprecedented extent. The socialist
nations, instead of expanding, will become reduced in
numbers, the birth-rate will fall below the death-rate, and
Socialism will ultimately disappear because socialists have
died out.
The general reluctance, if not refusal, of women to bear
children must have further consequences. It robs the sexual
relation of its ethical justification and value, and, therefore,
leads to the degradation of both men and women. Marriage
itself, when Nature's design is deliberately frustrated, is
hardly to be distinguished morally from prostitution, even
332 DEMOCRACY VERSUS SOCIALISM part iv
when the relation remains permanently monogynic. But
under the conditions created by Socialism it cannot rem^n so.
Woman, deprived of the satisfaction of the emotions which
the love and care of her children yields, will seek to fill
the void in other ways. Failing to find full satisfaction for
her yearnings — ^probably not fully understood — in the com-
panionship of her husband, she will look for it elsewhere ;
and, still unsatisfied, will go further afield. Divorce and
re-divorce will become so largely desired, that it must be
made easy ; and will be so largely availed of, that marriage
generally becomes but a temporary arrangement.
Other considerations support this view. While the
maternal sentiment is highly developed in most women,
the majority of women as well as men do not feel other
emotions very deeply. The love of which poets sing ;
the love which laughs at all obstacles and possesses the
soul to the exclusion of everything else, is not the lot of
the common herd. Minor emotions, more fleeting and
less ennobling than this, draw them to the great purpose
of life — the continuation of the race. The great majority
of marriages, therefore, as yet, are not and cannot be
perfect unions. When the first delirium is over, the
hero's dimensions shrink to those of an ordinary man and
the angel loses her wings. Then come the weeks and
months which try temper and nerves ; during which both
would gladly exchange the marital yoke for their former
freedom. But there is no ground for divorce, and shame
as well as pecuniary considerations prevents separation.
Presently, approaching motherhood invests the wife with
a new glory in her husband's eye ; his tenderness, as well
as the further joy that awaiteth her, clothes life in its
brightest colours. When the baby is born, its innocent
hands constantly strengthen bonds which otherwise would
yield under the strain, and its smiles forge other and more
powerful ones. Gradually, under the influence of their
common life — common interests and common love of
children — ^husband and wife find each other, and the union,
at one time so unpromising, becomes more perfect the
longer it lasts, securing to both the utmost happiness of
which their defective natures are capable.
CH. VI THE FAMILY UNDER SOCIAUSM 333
It will be far difFerent under Socialism. The pecuniary
independence of women will cause them to be less patient
with the ill-temper of a badly bred or exacting husband ;
the absence of a separate family home, involving public
repasts and the spending of all spare time in public, pre-
vents the close intimacy under which the nature of husband
and wife mingle till they are one. The absence of children,
or their removal from parental care, deprives the union of
any ethical value and of the only bond which can tie it
securely. In the great majority of instances, therefore, to
the unsatisfied maternal emotions there will be added actual
dissatisfaction with their marital lot either on the part of
husband or wife or both. These influences must tend to
multiply divorces, while the influences tending towards
restraint have been removed. Divorces and re-divorces,
therefore, must tend to increase, till public opinion will
see nothing shameful in the most frequent changes
of marital relations. The chastity of women, already
approaching perfection, and the chastity of men, which,
though as yet far from perfect, has nevertheless improved
and is still improving, will be lost again. Licence will
take the place of restraint, a licence such as Rome indulged
in during her decline, when reluctance on the part of
women to bear children, accompanied by the utmost
profligacy, prepared the downfall of the rulers of the
world.
The influence of these conditions must deprive large
numbers of women of all chance of permanent happiness.
The attractiveness of woman to man, being more physical
than that of man for woman, wanes earlier. Middle-aged
men, therefore, may and frequently do attract young
women, while in exceptional cases only do middle-aged
women possess any sexual attractiveness for young or
middle-aged men. Whatever, therefore, lessens the perma-
nency of the marital relation must tend to deprive numbers
of women of male companionship during their declining
years. The condition which Socialism must create, being
that of extreme instability of the marital relations, must,
therefore, react unfavourably on the lives of women to an
incalculable extent.
334 DEMOCRACY VERSUS SOCIAUSM partiv
Meanwhile, the training of the children by the State,
while adding to these tendencies, must produce further evils.
This training must in the first instance be undertaken by
professional nurses, to each of whom many infants must
be entrusted. Though their training may give them a
better knowledge of the treatment of infants than many
mothers possess, yet that knowledge cannot compensate
for the sleepless watchfulness of a mother and her constant
care. The high death-rate of foundling hospitals, while
to some extent accounted for by the origin of their inmates,
is, nevertheless, largely due to this substitution of pro-
fessional for maternal care. The death-rate in the State
nurseries, therefore, will be similarly great, adding to the
tendency to depopulation previously described.
The surviving children, from the earliest dawn of
their intelligence, will be exposed to influences far differ-
ent from those which would have shaped their character
in the parental home. For the training through sympathy
will be substituted a training through fear. The elastic
bounds to the natural wilfulness of children, which
parental care accommodates to the proclivities of each child,
will give way to fixed rules to which all children must
accommodate themselves. The dawning intelligence of
childhood, provoking constant questions in its endeavour
to understand, will be repressed and confined to fixed and
uniform lessons. Breach of rules will lead to punishment,
but no expression of love will encourage and meet repent-
ance. At the very time, therefore, when the intelligence
of the future men and women is most easily impressed,
when as a consequence the foundation of character is
being laid, influences are at work which must deteriorate
character. Absolute, unquestioning obedience ; abject
fear of persons in authority ; selfishness, untruthfulness,
and moral cowardice, must be the attributes of persons
whose early childhood has been exposed to such conditions.
The retrogression here sketched will be aided by
another cause. As the children of those less adapted to
the requirements of social life will be exposed to exactly
the same conditions as the children of those better
adapted, all will have an equal opportunity to survive.
cH.vi THE FAMILY UNDER SOCIAUSM 335
Instead of the survival of the fittest, i.e. those best adapted
for the requirements of social life, there will arise the
survival of the physically strongest, regardless of other
and socially more important qualities. Mere physical
strength will supplant the socially beneficial qualities, add-
ing hereditary retrogression to the retrogression induced
by training.
Socialism, disregarding the lessons of evolutionary
history in the sphere of the family, as it disregards them
in other spheres, must bring the utmost evils on the
nations which adopt it. Nature inevitably punishes the
breach of any of her laws ; where the breach is great the
punishment is great and terrible. All life arises from the
due discharge of parental responsibilities, and only through
the better discharge of such responsibUities have higher
types of life been evolved. To disregard this law is to
abandon the very foundation of social life. Retrogression,
decay, and eventual extinction will inevitably follow upon
such action ; they are the fruits which grow upon the
tree of Socialism.
Lest it be said that the picture here drawn is unjust to
socialists and Socialism, it may be prudent to cite some
evidence that it is not so regarded by many leading
socialists. A few quotations from the interminable mass
available will, on the contrary, prove that these socialists
aim at bringing about exactly such conditions as have
here been shown to be the inevitable outcome of the
adoption of Socialism. Nevertheless must it be remem-
bered that the great majority of socialists may be and
probably are out of sympathy with these aims and
ignorant of the goal to which Socialism leads.
" Human beings must be in a position to act as freely,
where their strongest impulse is concerned, as in the case
of any other natural instinct. The gratification of the
sexual impulse is as strictly the personal aflfair of the in-
dividual as the gratification of any other natural instinct.
No one has to give an account of him or herself, and no
third person has the slightest right of intervention. . . .
All these checks, all these contradictions to nature, in the
present position of women have led even persons who arc
336 DEMOCRACY VERSUS SOCIALISM partiv
not disposed to accept the further consequences of change
in our present social state to recognise the justifiability of
a perfectly free choice in love, and, if need be, of an
equally free dissolution of the relationship, without any
external hindrance." ^
"The present marriage system is based upon the
general supposition of the economic dependence of the
woman on the man, and the consequent necessity of his
making provision for her, which she can legally enforce.
This basis would disappear with the advent of social
economic freedom, and no binding contract would be
necessary between the parties as regards livelihood ; while
property in children would cease to exist. . . . Thus a
new development of the family would take place — an
association terminable at the needs of either party." *
"The present marriage laws hinder the socialist ap-
proach to the ideal. Because we hold Socialism will
ultimately survive as the only tenable moral code, we are
convinced that our present marriage customs and present
marital law must alike soon coUapse. ... In a socialist
form of government, the sexual relation would vary
according to the feelings and wants of individuals. . . .
Children apart, we hold it intolerable that Church or
Society should in any official form interfere with lovers." *
" It would be the duty of the State to scientifically
investigate the whole system of checks and to spread
among its citizens a thorough knowledge of such as were
harmless and efficient in practice."*
" Marriage is a life sentence, not even reducible to a
term of twenty years. . . . Monogamic marriage — a
thing obviously and by its nature degrading. . . . Per-
haps the most decent thing in true marriage would be to
say nothing, make no promises either for a year or for a
lifetime. ... It would be felt intolerable in any decently
constituted society that the old blunderbuss of the law
should interfere in the delicate relations of wedded life." *
^ Bebel, " Woman," JVoman in the Future^ pp. 229, 230.
' William Morrif and £. B. Bax, Socialism^ p. 199.
' Karl Pierton, Socialism and SeXj pp. 5, 6, 8, and 14. ^ Bid, p. 15.
' Edward Carpenter, Marriage in Free Society, pamphlet published by The Liboar
Press Society.
CHAPTER VII
THE ETHICAL OUTCOME OF SOCIALISM
Human beings are modifiable physically and mentally.
Hereditarily derived qualities, by small changes, are
brought into harmony with external conditions. Every
theory of physical and mental training ; every proposal to
encourage virtue and to discourage vice ; every attempt
to develop moral sentiments and aesthetic perceptions, is
based on the recognition of the fact, that the use or dis-
use of faculties is followed by an adaptive change in them,
resulting in increase or loss of power.
Moreover, such modifications are inheritable. By the
accumulation of small changes from generation to genera-
tion, constitutions are adapted to outward conditions. A
climate, fatal to other races, is innocuous to the adapted
race. Races have become immune to diseases previously
fatal to them, and still fatal to other races. Powers of
smell and sight have diminished among civilised races,
while the strength of reason and the breadth of emotions
have increased. Similarly, races sprung from the same
stock have acquired different aptitudes and tendencies
under the influence of different historical and geographical
surroundings. This process of differentiation is going on
at the present day in a manner easily recognisable. The
people of the United States and of the Australian colonies,
even those of purely British stock, are developing national
characters and physical types, differing from those of each
other and from those of the parent stock, under the in-
fluence of the new conditions in which they are placed.
This process of adaptation is proceeding always and every-
z
338 DEMOCRACY VERSUS SOCIAUSM partiv
where. It follows, therefore, that like adaptive modifica-
tions of character must follow every change in the social
environment.
It is true that the ideas and sentiments of the indi-
vidual members of a society tend to mould the character
of that society into harmony with themselves. It is,
however, no less true that the control exercised by any
society over its members tends to mould their ideas and
sentiments into congruity with its character. Mutual
modifications thus becomes cause of transformation in
both. Changes in the nature of the individuals compos-
ing a social organism sooner or later find expression
in corresponding changes in the structure of the organism ;
and changes in the structure of the social organism bring
about corresponding changes in the nature of the individuals
composing the organism. These changes find expression
in the average feelings and opinions of individuals. Quali-
ties which are regarded as virtues in one state of society
come to be regarded as vices in another, and vice versd.
Among savages, living almost exclusively on the pro-
duce of the chase, where the consumption of one must
necessarily lessen the opportunity of all others to maintain
themselves, where, as a consequence, unserviceable mem-
bers of the horde are almost as great an evil as the en-
croachment of another horde on the tribal hunting-grounds,
cruelty and treachery are regarded with supreme approval.
The impossibility of carrying on military operations on a
grand scale without strict discipline and obedience causes
another set of sentiments to be valued amongst great
military nations. Unswerving loyalty and unquestioning
obedience are held to be supreme virtues, and disloyalty
and disobedience are regarded as the worst of crimes.
Among industrial nations, trained in the regime of
contract, where service is exchanged for service, still
another set of sentiments is valued. Resistance to un-
authorised exercise of power, love of freedom and inde-
pendence, justice and honesty, are regarded as cardinal
virtues ; while servile submission to the wiU of superiors
and dishonesty are regarded with contempt, and cruelty
with horror.
cH.vii ETHICAL OUTCOME OF SOCIALISM 339
Innumerable and incongruous minglings of these
several sets of sentiments correspond with the multitudi-
nous stages in the transition from one to another of these
several social states. They may be observed even among
civilised nations. In Russia the preponderance of militarism
causes loyalty and unquestioning obedience to authority to
be regarded as the supreme virtues, and successful lying
to be admired. Nevertheless, the small amount of indus-
trialism which prevails has to some extent created respect
for honesty, love of freedom, and justice. In Germany,
where industrialism is more highly developed, love of
freedom, independence, and honesty are regarded as
virtues of siniilar rank to loyalty and obedience. In
Great Britain, and in her self-governing colonies, as well
as in the United States, the preponderance of industrialism
causes independence, honesty, love of freedom and of
justice to be regarded as virtues of the first rank, without
as yet entirely removing the respect thought to be due to
loyalty and obedience.
Socialism, profoundly modifying the structure of
society, must cause a like profound modification of ethical
conceptions. The natures resulting from a life carried on
under compulsory co-operation and equality of reward
must differ widely from those resulting from a life carried
on under voluntary co-operation ana the conformity of
reward to service rendered. While it is not possible to
depict in detail the resulting ethical changes, the experi-
ence of the past, nevertheless, enables a general forecast
to be made.
In a community in which all the affairs of life are
regulated by governmental agencies, where men and
women, from their earliest childhood, are accustomed to
act in obedience to such agencies, they must come to
forget that affiiirs can be otherwise regulated. The
members of the regulated classes are not allowed, and from
early childhood have not been allowed, to do anything
except what some superior prescribes. These superiors
themselves are bound by strict regulations which cannot
be suspended except by some official of a higher grade, and
these, again, are dependent for unusual acts upon the
340 DEMOCRACY VERSUS SOCIAUSM partiv
permission of still higher authorities. Men whose every
action has been and is thus controlled and regulated by
more or less distant and generally unknown authority,
lose the habit of acting upon their own impulses, and the
consciousness that independent action is possible. Com-
parison of the numerous philanthropic, artistic, scientific,
educational, and other objects achieved by the volimtary
co-operation of private persons in Great Britain and the
United States, with the paucity of such instances of indi-
vidual initiative in Russia, and even in Germany and
France, exhibits the tendency towards dependence upoh
authority which the exercise of authority engenders.
Socialism, with its necessarily minute regulation of
every industrial action, and extensive regimentation of the
regulative agency, must develop this tendency to an
almost inconceivable extent. Personal initiative and enter-
prise having become impossible, the consciousness of their
possibility and the habit of independent action must be
superseded by passive reliance upon authority and dumb
obedience to its orders.
The recognition of equal rights, and the sense of
justice and independence, result from the relation of
contract. Under this relation every benefit is consciously
purchased by effort, by rendering some benefit in return.
Every individual rendering a service is entitled to obtain
from others such service in return as the value of the
former warrants. The daily and hourly recurrence of
such exchanges under agreement, and the consequent
balancing of claims, involves the maintenance of self-
right? and the sympathetic recognition of other rights.
Hence arises habitual recognition of equality of rights, i.e.
the sense of justice, of independence and love of freedom,
leading to resistance to the exercise of unauthorised power
and to acts of injustice.
Socialism, substituting status for contract, must also
substitute related sentiments for those which originate
in the relation of universal contract. The cessation of
contracts must terminate the constant recognition of the
equal rights of the contracting parties upon which all con-
tracts are based. The constant fostering of the assertion
CH. VII ETHICAL OUTCOME OF SOCIALISM 341
of self-rights, and of the recognition of others' rights,
therefore, is^lost, and must ultimately lead to the loss of
the correlated sentiments, the sense of justice prompting
resistance to infringement of rights. Aggression thus
made easy must still further obscure the sense of justice,
and miist weaken still further resistance to aggression,
until slavish submission to every act of the governing
authorities becomes the universal sentiment. Resistance
to governmental acts of any kind then becomes disloyalty,
and slavish obedience the cardinal virtue.
This tendency is strengthened by the substitution of
compulsory co-operation for voluntary co-operation ; of a
universal " you shall " for " I will do as much for you as
you will do for me." No longer is it impersonal necessity
which compels men to work, but personal authority.
Authority determines the hours, nature, and place of
occupation of every man and woman, and none, among
the regulated classes, can know the reasons which dictate
the orders which they must obey. These orders may
result from necessity or caprice, from benevolence or
malevolence, but they must be obeyed all the same.
Slavery, therefore, takes the place of the existing in-
sufficient freedom, and from it must result the sentiments
which have accompanied slavery everywhere. Personal
initiative is lost ; the sense of freedom, the recognition of
personal rights, must be lost ; while blind obedience to
orders is the one sentiment constantly fostered among
the regulated masses.
This tendency is still fiirther added to by the loss of
all perception of impersonal causation in social affairs.
When all such affairs are regulated by authority, the idea
of self- regulation in soci^ processes must disappear.
Belief in personal causation must supplant the belief in
impersonal evolution. Hence must result a still further
belief in, and reliance upon, the omnipotence of the State,
and a total loss of the perception that social ameliorations
are brought about otherwise than through the compulsory
action of governmental agencies.
With the loss of the perception of personal rights and
of the sense of independence, loss of honesty and truthful-
342 DEMOCRACY VERSUS SOCIALISM part iv
ness must go hand in hand. To *' speak the truth and fear
no man " are correlated sentiments. Truthfulness is the
direct outcome of self-respect, as self-respect is the out-
come of the maintenance of personal rights. Where, as
under Socialism, these rights are denied and lost sight of ;
where the individual from earliest infancy is placed at the
command of a power which controls and regulates all his
actions ; where compulsory labour takes the place of
voluntary labour, and fear of punishment is the only
incentive to exertion, — honesty and truthfulness must
disappear. Deceit and lying are the only weapons of
defence under Socialism, as under every other form of
slavery; and as, for this reason, they have become the
universal trait of subject populations, so must they be-
come the trait of the regulated masses imder Socialism.
As shown in the preceding chapter, similarly related
sentiments must arise from the destruction of family life.
The sense of chastity must be lost ; so must be lost the
altruistic sentiments which, arising from parental solicitude,
bind man to man and generation to generation. Brutal
selfishness, wallowing in animalism, must submerge alike
the brightest flowers and the unfolding buds of himian
evolution.
The members of the socialised State, becoming men-
tally and morally adapted to this State, become unadapted
for any other. Instead of honesty, truthfulness, chastity,
unselfishness, a high sense of justice and of independence,
being regarded as the highest attributes, implicit obedience,
faith in and submission to authority, must come to be
regarded as supreme virtues ; and injustice, unchastity,
selfishness, untruthfulness, and dishonesty will provoke no
censure and no repulsion. Instead of gradually rising to
a higher moral state, mankind would fall back to the low
level of ethical perceptions from which it has been rescued
by the painful experience, the suffering and martyrdom,
of untold ages.
PART V
THE SINGLE TAX
[•
CHAPTER I
INTRODUCTION
Man does not live by bread alone. Even if it were
shown that Socialism could and would provide all with
more wealth than ordinary artisans now enjoy, there
would still arise the question, whether it would not
deprive men of other possessions ; of possessions so far
superior to a mere increase in wealth that past generations
have cheerfully sacrificed not only wealth, but life itself,
in their defence. In the foregoing examination it has
been shown that not only would Socialism sacrifice these
higher possessions of mankind, but that this sacrifice
would not be accompanied by any improvement in the
material condition of the people.
At the same time has been indicated the cause which
produces injustice in the distribution of wealth, and the
secondary evils thence arising, as well as the reform which
can remove this injustice, not only without sacrifice of the
higher possessions of mankind, but while adding to them.
This cause we found to consist of the legislative creation
of private monopolies, especially of the monopoly of the
land.
The removal of this cause, by the termination of all
monopolies which owe their origin to special laws, and
the appropriation by the social body of all natural mono-
polies, would, therefore, terminate the evil results which
flow from this cause.
Before entering upon a detailed exposition of the
manner in which this reform may be applied, so as to
combine the greatest production of wealth with absolute
346 DEMOCRACY VERSUS SOCIALISM part v
justice in its distribution, and without sacrificing any of
the higher possessions of mankind, it may be useful to
recapitulate some of the conclusions arrived at.
The principal ones were : —
( 1 ) That all the members of a State are entitled to
equal rights and equal natural and social opportunities.
(2) That every member of a State is entitled to the
full and exclusive possession of all the wealth which his
labour produces from equal opportunities with all others,
or which he receives under contract for services rendered
by him under the same conditions.
(3) That social injustice arises solely from the in-
fringement by the State of the claim of all to equal rights
and opportunities ; such infringements involving the
violation, by the State and by individuals, of the right of
each to the full and exclusive possession of the produce
of his labour or services.
(4) That social justice, therefore, cannot be achieved
by further violations of the social and individual rights of
the members of the State, but can be achieved solely by
the abolition of existing violations of these rights.
(5) That the principal infringement of the equal rights
of the members of the State consists in the legislative
creation of private monopolies, especially the monopoly of
the land, and that all such monopolies would disappear if
the State, abolishing all taxation, were to appropriate and
use for social purposes the annual rental value of all natural
monopolies, i.e. of monopolies arising from exclusive or
special rights to land.
(6) That the abolition of monopolies, destroying the
power of monopolists, would also terminate the excessive
power of the owners of competing capital over labour, and
would enable every labourer to secure wages of equal
value to that of the entire product of his labour.
In support of these conclusions the following dis-
tinctions, economic and ethical, were drawn between
capital and all other forms of wealth, i.e. labour-products
on the one part, and land in all its forms on the otJier part.
CHAP. I INTRODUCTION 347
Economic
( 1 ) Labour-products are the result of individual exer-
tion, performed singly or in co-operation with others.
Land is not a product of human exertion, and the value
of land arises, not from individual exertion, but from natural
differences of productivity, made potent by social growth
and necessities.
(2) All labour-products are ephemeral, the sole purpose
of their production being their consumption.
Land exists for ever, and monopolies accumulate.
(3) Social progress reducing the requisite exertion in
the production of labour-products, consequent increase of
production reduces their value.
Social progress does not create any ability to produce
land ; it merely increases the competition for land, and
consequently adds to its value.
As a result of the facts set forth in (2) and (3), the value
of land, i.e. natural monopolies, largely exceeds the value
of accumulated labour-products in every country.
(4) Labour-products cannot arise without the use of
land.
Land does not arise from the use of labour-products.
(5) Labour-products are not limited in the sense that
their quantity cannot be increased. On the contrary, the
more labour-products are consumed the more are produced.
Land is limited. The more land any one person
appropriates the less is available for appropriation by
others.
(6) Private ownership of labour-products, inclusive of
capital, does not add to natural rent and interest.
Private ownership of land does add spurious rent and
interest, as well as profit, to natural rent and interest.
(7) Taxes on labour-products, increasing their price,
tend to reduce the consumption and production of labour-
products and the employment of labour.
Taxes on the value of land, reducing the monopoly
and price of land, tend to increase production, the employ-
ment of labour, and therefore consumption.
348 DEMOCRACY VERSUS SOCIAUSM part v
Ethical
(i) Labour -products being the result of individual
exertion, the right to their possession is unequal, i.e.
dependent upon service rendered.
Land not being the product of exertion, the value of
land being the result of social growth and necessities, the
right to the possession of land is equal, i.e. no one can have
a better right to the possession of land than any other.
(2) The value of labour-products is the measure of
the service which their rightful owner has rendered to
the community.
The value of land is the measure of the service which
the community is expected to render to the owners of
land.
(3) Private ownership of labour-products results from
a natural right antecedent to any legislation.
Private ownership of land originally arises from
violence and fraud, subsequently sanctioned by legislation.
(4) Private ownership of land involves the perpetual
infringement of property rights ; it enables the owners to
perpetually appropriate wealth made by others without
rendering service in return.
Private ownership of labour-products does not involve
any infringement of property rights; it does not enable
the owners to appropriate wealth in excess of the value of
the services rendered by them.
CHAPTER II
OBJECTIONS TO PRINCIPLES
The conclusions set forth in the preceding chapter, or
several of them, have been, and are being, contested by
socialist writers as well as by their opponents. The same
objections being frequently urged by several authors, those
have been selected for refutation here who claim notice,
either by their representative character or by their power
of argumentation.
" If labour alone gave property, the landowners* case is
much better on Mr. George's principles than he admits.
Suppose by labour a piece of land was banked and enclosed
from the sea — made, in short, not a part of the land
' originally entailed on the puniest,' etc. — Mr. George must
admit a right to it in the man whose labour made it. But
what is the difference between the case put and land in
general, except that in land in general there was, before
labour was put on it, what has been called the * prairie
value ' ? That is what, if anything, was * entailed on the
puniest,' etc. Tax that, confiscate that, but not the stored
labour which is on the land." ^
"It is important to notice that, though in common
talk we separate the two (land and capitd), and though
political economists have given a scientific dignity to this
rough classification of the instruments of production, dis-
tinguishing as ' land ' that which has been provided by
* Nature,' and as * capital ' that which has been made by
human industry, the distinction is not one which can be
^ Lord Bramwell, Nationalisation of Land, p. 9. Published at the Central Office of
** The Liberty and Property Defence League."
350 DEMOCRACY VERSUS SOCIALISM part v
clearly traced in dealing with the actual things which are
the instruments of production, because most of these are
compounded of the gifts of Nature and the results of
human activity. . . .
" The natural capabilities of land are increased, and,
indeed, even called into existence, by the mere develop-
ment of society. But, further, every foot of agricultural
and mining land in England has been improved as an in-
strument of production by the exercise of human labour.
"First, of human labour not on that land itself; by
the improvement of the general climate, through clearing
of forest and draining of marsh ; by the making of canals,
roads, railways, rendering every part of the country acces-
sible ; by the growth of villages and towns!; by the im-
provement of agricultural science ; and stiU more, by the
development of manufactures and foreign commerce. Of
all this human labour no man can say which part has made
the value of his land, and none can prove his title to
monopolise the value it has made.
" Secondly, all our land has been improved by labour
bestowed especially upon it. Indeed, the land itself, as
an instrument of production, may be quite as truly said to
be the work of man as the gift of Nature. Every farm
or garden, every mine or quarry, is saturated with the
effects of human labour. Capital is everywhere infused
into and intermixed with land. Who distinguishes from
the mine the plant by which it exists ? Who distinguishes
from the farm the lanes, the hedges, the gates, the drains,
the buildings, the farm-house ? Certainly not the English
man of business, be he landlord, farmer, auctioneer, or
income-tax commissioner. Only the bold bad economist
attempts it, and, we must add, some few amongst our
allies, the land-nationalisers. . . .
" When we consider what is usually called capital we
are as much at a loss to disentangle it from land as we are
to find land which does not partake of the attributes of
capital.
"For though capital is conmionly defined as wealth
produced by human labour, and is destined, not for the
immediate satisfaction of human wants, but for transforma-
CHAP. II OBJECTIONS TO PRINCIPLES 351
tion into, or production of, the means of such satisfaction
in the future, yet railways, docks, canals, mines, etc., which
are classed as capital among the instruments of production,
are really only somewhat elaborate modifications of land.
The buildings and the plant with which they are worked
are further removed from the form of land, but we lump
the lot as capital. All farming improvements, all indus-
trial buildings, all shops, all machinery, raw material, live
and dead stock of every kind, are called capital. And just
as there is a purely social element in the value of land, so
there are purely social elements in the value of capital, and
its value, in all its forms, depends upon its accessibility
and fitness here and now, and not on the labour it has
cost. The New River Company's Water shares have
their present enormous value not because Sir Hugh
Middleton's venture was costly, but because London has
become great." ^
The " fine old crusted Tory," Lord Bramwell, writing
on behalf of a body whose principal object is to maintain
the existing system, thus agrees with the spokesman of the
Fabian Society in asserting that no distinction can be drawn
between capital, i.e. labour -products, and land. Lord
Bramwell takes the case most favourable to his contention,
" a piece of land banked and enclosed from the sea — made,
in short," and triumphantly claims that if this piece of land
rightfully is private property, all other land also may right-
fully become private property. If the premise is true the
conclusion is inevitable. But is it true } Lord Bramwell
has treated it as an axiom ; has made no attempt to prove
it. Yet a slight examination shows that it is erroneous,
and reveals the origin of the error. Land in the sense of
the dry surface of the globe — that is, in the restricted sense
— is confounded with land in its wider sense, as including all
the energies and matter of nature outside of man and not
altered by his activity. The sea is land as much as an
adjoining field. It is land covered with water. Human
labour removes the water from the land and raises the
level of the land, but it does not " make " the land. If
thereby it creates a value, that value belongs to him who
^ '' Fabian Tract," No. 7, Capital md Land, pp. 3, 4, and 7.
352 DEMOCRACY VERSUS SOCIALISM party
exercised the labour. The value of the improvement
belongs to the improver, but not any value or the land,
i.e. any value which may attach to the position in which he
places his improvement. These two values are so easily
separated that it is a widespread practice so to do. In
Great Britain, where landlords are by law entitled to
claim the foreshore on which their land abuts, rent is
habitually paid by those who reclaim the foreshore. The
landlord, not the improver, takes the land value. If the
State, instead of the individual landlord, "confiscates"
this value, it does exactly what Lord Bramwell demands.
It abstains from confiscating " the stored labour on the
land," and does confiscate the value, not due to stored
labour, and which he erroneously terms " prairie value."
The Fabian pamphleteer argues his objection more
elaborately. His arguments, moreover, are of several
kinds. One is that no distinction can be drawn between
land and capital, because " most " forms of capital " are
compounded of the gifts of Nature and the results of
human activity." The term "compounded," however,
is a very loose one. The only meaning which can attach
to the sentence in which it occurs is, that most forms of
capital consist of gifts of nature altered in place or form,
or in both respects, by human activities. This is true, not
merely of " most " but of all forms of capital and wealth.
This fact, however, does not prevent any human being
from apprehending the difference between a river and a
cup of water ; between a clay-bed and a brick ; between
a deposit of coal and a ton of coal at the pit's mouth ;
between a deposit of ironstone and a locomotive. Though
the cup of water, the brick, the ton of coal, and the loco-
motive are " compounded of the gifts of nature and the
results of human activity," they are, nevertheless, or rather
on account of this compounding, easily distinguishable
from the river, the clay-bed, and the deposit of coal and
ironstone, from which they were separated by human
labour.
The second argument used is, that social activities, of
which " no man can say which has made the value of his
land," "have improved land as an instrument of pro-
CHAP. II OBJECTIONS TO PRINCIPLES 353
duction." This is true, and it is equally true that the
result of these social activities cannot be distinguished from
the value of land. Being the result, not of individual
activities, but of social activities, they rightfully are
common property and not individual property. They,
therefore, must be regarded and have been regarded
throughout this work, — as by all Land Nationalisers and
Single Taxers, — as part and parcel of the value of land.
It is, however, different with regard to those improve-
ments effected by labour "specially bestowed upon the
land," which, in his third argument, the pamphleteer alleges
also to be indistinguishable from the land itself. Is it
true that a building cannot be distinguished from the land
on which it stands.^ Every building-lease proves the
contrary. Is it true that the hedges, fences, gates, drains,
and buildings on a farm cannot be distinguished from the
land of the farm ? It is done every year in Queensland,
South Australia, New South Wales, and New Zealand, as
well as in other parts of the world, where improvements
are exempted from taxation which falls upon the land alone.
It is likewise done wherever the tenant's property in farm
improvements effected by them is recognised by law or
contract. Similarly, everyday experience proves that the
capital of a mine, its shafts, drives, machinery, and build-
ings, can be differentiated from the natural deposit, which,
together with this capital, constitutes the mine. For when-
ever a landlord charges royalty to a mining company, both
of them draw this distinction, and the appropriation of the
royalty by the State would nationalise the land of the mine
without infringing upon the capital of the mine.
The fourth argument is, that such capital as railways,
docks, canals, mines, and the buildings and plants with
which they are worked, as well as the New River Com-
pany's Water Shares, though capital, cannot be " dis-
entangled " from land. This statement, like the preceding
ones, is the result of an insufficient analysis ; of the in-
ability of socialists to separate monopoly from capital. The
improvements which constitute the "road" — levelling,
cuttings, bridges, ballast, sleepers, and rails, as well as the
rolling stock, station buildings, repairing shops, adminis-
2 A
354 DEMOCRACY VERSUS SOCIALISM part v
trative buildings, and any furniture and machinery therein —
constitute the capital of a railway and have no analogy
with land. The land on which the buildings stand, or on
which the road is laid, as well as the exclusive privilege to
the right-of-way over the continuous track, constitutes the
land. The union of these two classes of things forms
a railway. Yet there is not the slightest difficulty in
separating the capital and its value from the land and its
value. That the application of the same analytical principle
to a mine yields the same result has been shown already.
Nor is it necessary to do more than point out their applica-
bility to docks, canals, the property of water companies
and similar undertakings, the value of which consists
partly — and in the New River Company almost entirely —
of the value of special privileges in die use of natural
media.
The allegation that "the English man of business"
does not distinguish between land and capital, if true,
would be serious. For seeing that capital, being a labour-
product, is ephemeral, while land is eternal, and legal
privileges to the special use of land are not exposed to
wear and tear, its truth would cast serious doubt on the
intelligence of English business men. The allegation,
however, is erroneous. Business men, English as well as
foreign, are in the habit of capitalising incomes from land,
or incomes arising mainly from the privileged use of land,
at a higher rate, other things being equal, than incomes
arising from the use of capital. Interest at the rate of 4
per cent from railway shares is regarded as a good return ;
but the same interest is considered exceedingly unsatisfactory
when derived from shares in a cotton factory. Or to put
it in another way : an income of ^ 1 000 from ground rents
would be worth ^34,000 in the market, when a like
income from any competitive industrial undertaking would
be worth no more than ^20,000, and probably less. Men
of business, therefore, do not deserve the reflection cast
upon them.
Finally, attention must be drawn to the crudeness of
classification which applies the term " instrument of pro-
duction " alike to a machine and to land. If socialists
CHAP. II OBJECTIONS TO PRINCIPLES 355
were to be more accurate in their classification, if they were
to separate the means and instruments which men employ
in production from the opportunities on which they are
employed, many economic and ethical errors would be
avoided.
Another series of arguments, differing from those con-
tained in the preceding extracts but coming from the same
quarter, must now be examined. They are contained in
the following extracts : —
" They (Land Nationalisers) use the argument that
capital, unlike land, is created by labour, and is therefore
a proper subject of private ownership, while land is not.
Socialists do not overlook the facts on which this argument
rests, but they deny, on the grounds already partly stated,
that any distinction can be founded on them sufficiently
clear and important to justify the conclusion drawn. But,
supposing we assume it true that land is not the product
of labour and that capital is, it is not by any means true
that the rent of land is not the product of labour and that
the interest on capital is. Nor is it true, as Land
Nationalisers frequently seem to assume, that capital
necessarily becomes the property of those whose labour
produces it ; whereas land is undeniably in many cases
owned by persons who have got it in exchange for capital,
which may, according to our premises, have been produced
by their own labour. Now, since private ownership,
whether of land or capital, simply means the right to draw
and dispose of a revenue from the property, why should
the landowner be forbidden to do that which is allowed to
the capitalist, in a society in which land and capital are
commercially equivalent ? Virgin soil, without labour
upon or about it, can yield no revenue ; and all capital has
been produced by labour working on land. The landlord
receives the revenue which labour produces on his land in
the form of food, clothing, books, pictures, yachts, race-
horses, and command of industrial capital, in whatever
proportions he thinks best. The ownership of land
enables the landlord to take capital for nothing from the
labourers as fast as their labour creates it, exactly as it
enables him to squander idly other portions of its products
356 DEMOCRACY VERSUS SOCIAUSM part v
in the manner that so scandalises the land nationalisers.
When his tenants improve their holdings by their own
labour the landlord, on the expiration of the lease, re-
morselessly appropriates the capital so created by raising
the rent. In the case of poor tenants holding farms from
year to year in Ireland, the incessant stealing of capital by
this method so outraged the moral sense of the community
that the Legislature interfered to prevent it long before
land nationalisation was commonly talked of in this country.
Yet land nationalisers seem to be prepared to treat as
sacred the landlords' claim to private property in capital
acquired by thefts of this kind, although they will not
hear of their claim to property in land. Capital serves as
an instrument for robbing in a precisely identical manner.
In England industrial capital is mainly created by wage-
workers who get nothing for it but permission to create in
addition enough subsistence to keep each other alive in a
poor way. Its immediate appropriation by idle proprietors
and shareholders, whose economic relation to the workers
is exactly the same in principle as that of the landlords,
goes on every day under our eyes. The landlord com-
pels the worker to convert his land into a railway, his
ren into a drained level, his barren seaside waste into a
fashionable watering-place, his mountain into a tunnel, his
manor park into a suburb full of houses let on repairing
leases ; and lo ! he has escaped the land nationalisers — his
land is now become capital and is sacred.
" The socialists admit that labour has contributed to
capital and that labour gives some claim to ownership.
The socialists, however, must contend that only an in-
significant part of our capital is now in the hands of those
by whom the labour has been performed, or even of their
descendants. How it was taken from them none should
know better than the Land Nationalisers." ^
The first allegation is, that even if capital were dis-
tinguished from land as a fit subject of private ownership
on account of its being the product of labour, " it is not
by any means true that the rent of land is not the product
^ Fabian Tract, No. 7, Capital and Land^ pp. 4, 5. Published by ** The Fabian
Society."
CHAP. II OBJECTIONS TO PRINCIPLES 357
of labour, and that the interest on capital is ; " the tacit
assumption being, that both interest and rent are the result
of human labour, and that, therefore, no distinction can be
drawn between them. In one sense, both interest and
rent are the result of human labour, i.e. both reach the
owner in the shape of labour-products. In another
respect, however, they differ widely. Natural rent is not
the product of individual labour but that of the superior
opportunity on which labour is exercised.^ If it is admitted
that all the members of a society are entitled to equal
opportunities, it must also be admitted that rent is a
common possession of all of them and cannot be rightfully
reduced to private ownership.
Interest, like rent, is no deduction from the product
of individual labour ; but, unlike rent, is also no deduction
from the product of common labour. It is the product
of individual services rendered by the owners of capital.^
Interest, therefore, cannot rightfully be made common
property, unless capital can rightfully be made common
property. If, then, it is admitted, as, for the sake of
argument it is admitted by this writer, that capital is not
a proper subject of common ownership, it follows that
interest also is not a proper subject of common ownership.
The second argument is, that existing capital has not
generally been produced by those who own it, while land
has in some instances been acquired with capital produced
by those who owned it, and the complaint is urged, that
Land Nationalisers " seem to be prepared to treat as sacred
the landlords' claim to private property in capital acquired
by theft (legal theft), dthough they will not hear of their
claim to property in land."
Before replying to this argument and complaint, the
question must be asked. What is the object of social reform ?
Is it to redress injustice committed in the past, or is it to
prevent injustice being committed now and in the future.?
The former is impossible. Who can say which parts of
the capital now existing were rightfully acquired by their
owners and which were not ? Even if the capital wrong-
fully acquired by present owners could be separated from
^ See Part II. chap. viii. ' See Part II. chapt. ix. and x.
358 DEMOCRACY VERSUS SOCIALISM party
that rightfully acquired, who knows the legitimate claim-
ants and can restore it to them ? Obviously, these diffi-
culties are insoluble. Moreover, if the private appropriation
of land were an injustice, which, committed by men now
dead, affected none but their dispossessed contemporaries
equally dead, on what plea could the private ownership of
land be condemned now ? Inflicting no present or future
injustice, and the removal of past injustice being impossible,
no valid claim to the dispossession of present owners could
be advanced.
The only possible object of social reform, therefore,
is the prevention of present and future injustice. The
question whether some or most of the existing capital has
been wrongfully acquired, therefore, does not concern us.
Present capital will have disappeared in a few years. What
is of importance is to prevent the wrongful acquisition of
capital now being made or which will be made in the
future. That this writer knows that private ownership of
land alone gives to its owners the power to wrongfully
acquire capital ; that he also knows that the abolition of
such private ownership would prevent capital being wrong-
fully taken from those who make it now, or will make it
in the future, seems to be shown by the two concluding
sentences of the foregoing quotation : —
" The socialists, however, must contend that only an
insignificant part of our capital is now in the hands of
those by whom the labour has been performed, or even of
their descendants. How it was taken from them, none
should know better than the Land Nationalisers."
It is the same with the claim that some land has been
acquired by present owners with wealth produced by them.
Men are entitled to the produce of their labour, but not
necessarily to that which existing injustice enables them
to obtain in exchange for the produce of their labour. A
slave is no less entitled to his freedom when he has been
sold than when he is in the hands of the original captor.
Private ownership of land and monopolies being an in-
fringement of the equal rights of all, conferring upon their
owners the legal right to appropriate the wealth belonging
to others, the question how men came to be owners of
CHAP. II OBJECTIONS TO PRINCIPLES 359
them cannot affect the right of all others. Even if the
government of a country has sold land and monopolies
against wealth produced by the purchasers, the right of all
others to the wealth which they produce remains intact.
As this right is violated as long as private ownership in
land and monopolies is recognised, private ownership, even
under these circumstances, is a wrong, and must therefore
be abolished.
A pamphlet. Property in Land^ professes to show :
Firstly, that the owning of land is justifiable on exactly
the same grounds as the owning of any other material
object ; and, secondly, that land or any other thing, may
be owned by some without transgressing the equal rights
of others. The pamphlet is too elaborate to permit of the
quotation of such parts of the arguments used as are not
disputed. These, therefore, will be reproduced in sum-
marised form.
Labour can produce nothing. It can only alter the
form or place of matter. " That land is not the pro-
duce of labour affords no grounds for placing property
in land on a different footing from property in other
things."
" There is no form of wealth natural or artificial that
is not strictly limited. The number of gold coins and
the quantity of bullion ... of pig-iron, lead, copper,
etc., in the world is limited ; and instead of these things
being producible in infinite quantities, the quantities are
so definite that a very small change in the supply or
demand for any of them is sufficient to cause great fluc-
tuations in price. Not only is it a fact that every kind
of wealth is limited in quantity, it is also the fact that it
would not be wealth unless it were so limited." . . .
Therefore, " land does not diflFer from, but agrees with,
all other kinds of property in being limited."
" The assumption that land is the common inheritance
of mankind, as a generality, looks quite axiomatic ; but
when we reduce it to a particular case, we reduce it to an
absurdity. The assumption is, that each of my readers
and all the inhabitants of Timbuctoo are part proprietors
of the land of Ottawa, and that no one can take possession
36o DEMOCRACY VERSUS SOCIAUSM part v
of an acre there^ without usurping our rights > Land being
made by no man, any one who takes possession of un-
occupied land does harm to no one. After the land has
been cleared, enclosed, and cultivated, the claims of fresh
emigrants to a share in it, would lead to perpetual fighting.
. \ . The basis of property is not the securing to each of
the produce of his labour, for labour produces nothing,
but the acknowledgment of the priority of claim, which is
the only way to avoid continual strife."
Dealing at length with arguments advanced by Herbert
Spencer in Justice^ the following summary of the objections
to the same is given : —
" The arguments given above may be summed up as
follows : — The theory' that land ought not to be private
property rests solely on the assumption that the natural
media are common property, in the sense that they belong
equally to all men — an assumption which looks so rational
that it has been accepted and endorsed by most of the
great writers for centuries past, yet it will not stand
criticism. The first corollary from the so-called axiom,
that all natural objects are the common heritage of man-
kind, is that, as no one ought to use the property of
others so as to destroy it, therefore, no one ought to use
any natural object as fuel or as food, or in any other way
that destroys it. If this reductio ad absurdum can be
explained away the next corollary is that, as all material
objects form part of the common heritage, the title to
private property must be in all cases not merely imperfect,
but absolutely bad. Again, if we accept the dictum that
no one ought to appropriate any natural object unless
there is enough, and as good, left for everybody else, then
nothing would ever be appropriated." ^
The first argument advanced by Mr. Spence is, that
as labour cannot create anything out of nothing, labour-
products are not " made " by labour, and therefore stand
in this respect on an equality with land. The obvious
reply to this contention is, that while land would exist in
^ The italics are mine.
' J. C. Spence, Property in Landy published at the central office of The Liberty and
Property Defence League.
CHAP. II OBJECTIONS TO PRINCIPLES 361
the absence of man, labour-products would have no exist-
ence in man's absence. Likewise, all land would continue
to exist if men were foolish enough not to use their
energies productively ; but labour-products would quickly
disappear. Labour-products are, therefore, differentiated
from land by human exertion. The manner in which they
are differentiated does not affect the question.
The contention that all kinds of labour-products are
limited as land is limited is even more preposterous.
Labour-products are limited only by two conditions, land
and labour. The material of labour-products becomes
accessible through land, as the dry surface of the globe ;
labour separates them from land. Labour, that is the
number of human beings and their efficiency in produc-
tion, is a constantly increasing quantity, and, so far, no
limit has been discovered to the material of labour-products.
Labour- products, therefore, are unlimited in the sense
that man has not yet discovered, if he ever will discover,
the limit to their production.
Land, even in this same sense, that of the dry surface
of the globe, however, is limited. Only here or there can
man add to it, by converting a small area of swamp, lake,
or sea into dry land, and these additions are unimportant
and themselves strictly limited. Nor does the area of
land grow in other ways. The more land is appropriated
by one man, the less land is available for appropriation by
others. Hence the area of land is limited, while the
quantity of producible labour-products is, as far as man
can see, unlimited.
The third and fourth contentions are, that, if land is
the common inheritance of mankind, the inhabitants of
Timbuctoo and of all other countries are part proprietors
of the land of Ottawa, and that " no one can take
possession of an acre there without usurping the rights
of" all others.
The same contention is urged in a more incisive
manner by Wm. E. H. Lecky : —
" If the land of the world is the inalienable possession
of the whole human race, no nation has any right to claim
one portion of it to the exclusion of the rest. The French
362 DEMOCRACY VERSUS SOCIALISM part v
have no more right to the soil of France than the Germans.
Inequalities of fortune are scarcely less among nations
than among individuals, and they must be equally unjust.
. . . And what possible right, on the principle of Mr.
George, have the younger nations to claim for themselves
the exclusive possession of vast tracts of fertile and almost
uninhabited land, as against the teeming millions of the
overcrowded centres otthe old world V^
Admitting that all men, without distinction of race or
colour, have equal rights to all the earth, it by no means
follows that none of them may take possession of any
part of it ; what does follow is, that no one of them may
take more than his equal share of land, without com-
pensating all others for the special privilege which he
assumes.
All men being equally entitled to the use of land ;
man being unable to live without using land ; man being
also unable to live in society without regulations regarding
the use of land — it becomes the duty of every social body
to frame such regulations as will ensure the equal rights of
all its members to the use of land. If all mankind formed
one social body, the contention would be true, that this
social body must frame regulations safeguarding the equal
rights of all men to the use of the whole earth. As long,
however, as men are associated in several and distinct
social bodies, justice is satisfied, if each of these social
bodies frames regulations safeguarding the equal rights of
all its members to all the land which each of these social
bodies controls. As between the members of each social
body, justice requires such regulations to be framed,
whether they are or are not equally framed by other
social bodies.
It might, however, be contended that, on the principle
of equal rights to land, no social body is justified in
appropriating the rent of land for purposes beneficial to
its own members alone ; that the rent of all countries
belongs equally to all mankind. If nations excluded the
members of all other nations from citizenship this con-
tention might be of some value. Seeing, however, that
^ Wm. E. H. Lecky, Dtmocracy and Liberty y vol. ii. pp. 293, 294.
CHAP. II OBJECTIONS TO PRINCIPLES 363
the rent of land is the only fund from which governmental
expenditure can be met without injustice; that such
expenditure, equitably made, confers equal benefits on
all citizens ; the admission to citizenship of the members
of other nations confers upon all who claim citizenship an
equal share in the rent of land.
This also is the answer to Mr. Lecky's contention that
the younger nations of the world have no right, as against
the teeming millions of the old world, to the exclusive
possession of vast tracts of almost uninhabited land.
These young nations prefer no claim to such exclusive
possession, in the only sense in which the term can be
legitimately used here, i.e. that they deprive the members
of older nations of the use of such land. Unable, even
if they were willing, to bring the land which they control
to the inhabitants of the older world, they have no
objection to the latter coming to that land ; nay, are
anxious for them to do so. When, therefore, they have
appropriated rent for common purposes they will have
recognised the equal right of all men to their land.
It is true, some of these younger nations exclude or
limit the admission of one or another inferior race, and in
so far infringe this principle of equal right. This exclusion,
largely due to causes and sentiments which originate in
the one-sided competition arising under the existing
system, would disappear with it. It, however, rests to
some extent also on the perception that the admission of
such inferior races must tend to reduce the adaptation to
social life of future generations. How far this is true and
whether, if true, it would justify the exclusion of inferior
races are questions outside the present discussion.
The fifth contention is, that priority of claim, and not
the securing to each the product of his labour, is the basis
of property, because in this way alone can perpetual fight-
ing be avoided. The question arises at once, priority of
claim to what } To the whole earth, to a continent, to a
province, or to how much less of the earth's surface ?. It
might be said that it can be left to each society to regulate
the extent to which it will admit any one's priority of
claim. That, however, is no answer to the question to
364 DEMOCRACY VERSUS SOCIAUSM part v
what extent ethics enforce the recognition of priority of
claim.
Nor is it possible to answer this question, for ethics
cannot recognise priority of claim as a basis of property.
Even if, between two contemporaries, priority of claim
could confer a valid title, their action or non-action cannot
affect the rights of succeeding generations. A child cannot
be held to have lost its natural rights because its father
failed to claim his own. Otherwise men might be right-
fully refused their freedom because their remote forefathers
had sold themselves into slavery or because they had failed
to claim their freedom.
The last contention, similarly directed to prove that
land can rightfully be converted into private property,
consists of the assertion that three corollaries drawn from
the doctrine that natural media are common property,
establish its absurdity.
The first and third corollary are practically identical,
the first including the last. It is, that "as no one ought
to use the property of others so as to destroy it, therefore
no one ought to use any natural object as fuel or as food,
or in any other way that destroys it."
As no one can use any natural media continuously
without destroying them, in the only sense in which men
can destroy anything, i,e. lessening or destroying their
usefulness to mankind, the prohibition includes all natural
media. Ex hypothesis all men possess equal rights to the
use of all natural media. Therefore, it cannot be a true
corollary from this doctrine that none has any right to
the use of any natural media. On the other hand, it is
clear, the equaJ right of all is maintained, if none of them
takes more from the common stock than any of the others
can withdraw therefrom. Likewise, if any one of them
takes more from the common stock than each of all the
others can take, and fully compensates all the others for
the greater privilege assumed by him, the equal right of
all to natural media is fully maintained. Not non-use of
natural media, but equality of use or compensation for
unequal use, is the logical corollary of the doctrine of
equal right to the use of natural media.
CHAP. II OBJECTIONS TO PRINCIPLES 365
The second corollary drawn by Mr. Spence is, that
" if all natural objects form part of the common heritage,
the title to private property must be, in all cases, not
merely imperfect, but absolutely bad."
This contention is true, in so far as all title to private
property is bad, as long as the equal right of all to the use
of natural media is infringed upon. But if this equal
right is recognised, the title to private property in labour-
products is rendered perfect. For these reasons : —
All men having equal rights to the use of all natural
media, each of them has full right to the use of natural
media not desired by others. If more than one desire to
use any, each is entitled to an equal use of them with
these others. If they allot the use of them to one
amongst them, the others are entitled to compensation for
the relinquishment of their equal right.
All natural media become accessible to man through
land. Where land is valueless, no man or only one man
desires the use of the natural media to which it gives
access. Land obtains a value when more than one desires
its possession. If its use is allotted to one of them, the
other or others must use land giving access to less desirable
natural media. The value of any piece of land, i.e. its rental
value, therefore, measures the advantage in the use of
natural media which it affords to the possessor over that
which can be derived from the use of land having no value
and open to all. Hence, if the rent of all valuable land is
paid into a common fund from which all may withdraw
equal shares, directly or indirectly, the equal right of all
to the use of all natural media is maintained. Those who
have withdrawn less from the common stock than others,
have participated equally with these others in the resulting
advantage. Equality of right to the common possession
being thus maintained, each is fully entitled to the separate
possession not only of the natural media thus withdrawn
from the common stock, but also to any additional value,
however great, which his labour creates therein.
When, however, the equal right of all men to the use
of all natural media is disregarded ; when some withdraw
more from the common stock than others, without making
366 DEMOCRACY VERSUS SOCIAUSM part v
compensation to these others, the title to private property
in labour-products is imperfect, because the title to the
material composing them is bad.
Finally, there must be considered the arguments
advanced by the late Professor Huxley against the theory
of natural rights generally and that of the equal right to
land specially. Siet forth at great length, they are never-
theless fully stated in the following extracts '} —
Endeavouring to refute equal natural rights in the
social state, he takes the case of two men, sole inhabitants
of an island, stalking the same goat to which each of them
has a full natural right, and states : * —
" If each insisted upon exerting his full natural rights,
it is clear that there is nothing for it but to fight for the
goat. . . . On the other hand, if the two men followed
the dictates of the commonest common sense not less than
those of natural sympathy, they would at once agree to
unite in peaceful co-operation with each other, and that
would be possible only if each agreed to limit the exercise
of his natural rights so far as they might involve any more
damage to the other than to himself. That is to say, the
two men would in reality renounce the law of nature and
put themselves under a moral and civil law, replacing
natural rights which have no wrongs for moral and civil
rights, each of which has its correlative wrong."
It seems obvious that Professor Huxley did not fully
consider the problem. He fixed his attention upon the
maintenance of the natural rights of one of these two men,
whereas the problem before him was, how to maintain the
equal natural rights of both of them to the goat. For if
they " fight for the goat " and the stronger of them takes
it, the equal right of the other is clearly infringed upon.
The maintenance of the equal natural right of each of
them to the goat requires, therefore, just such an arrange-
ment as Professor Huxley describes under the term
" moral and civil right." The equal division of the goat
between these men, for instance, far from being a
"renunciation of the law of nature," would be the
^ Professor T. H. Huxley, *' Natural Rights," Ntneuenth Century, February 1890.
a Ibid. p. 182.
CHAP. II OBJECTIONS TO PRINCIPLES 367
method adopted to give fullest recognition to the law of
nature.
In addition to this imperfect and, therefore, misleading
recognition of the problem, there is confusion of thought.
Moral right is contrasted with natural right. Yet if the
social state is natural to man ; if moral law is the law
obedience to which furthers and disobedience to which
hinders life in the social state ; then obviously moral law
is the natural law of man in the social state, and moral
rights and natural rights are identical.
Equally misleading is the use of the terms "moral
rights" and "civil rights" as denoting identical things.
If civil rights are necessarily moral rights, no unjust custom
or law has ever existed or ever can exist. If every moral
right has always been recognised as a civil right there is
no such thing as growth in social morality. Society has
then been as moral at its beginning as it is to-day and ever
will be, and our laws and customs are morally identical
with those of the most degraded cannibals.
Apart from this absurdity, Huxley's moral rights are
evidently nothing else but natural rights under social
conditions ; and further, admitting that the moral law
enforces equality of rights — " no more damage to the
other than to himself" — he thereby condemns as immoral
inequality of rights. Yet this admission is made in the
course of an argument in favour of the exclusive right of
some to the earth.
Professor Huxley's second endeavour is to show the
erroneous nature of the contention that, labour being the
only basis of property-rights, private property in labour-
products can coexist with equal rights to land. In support
of this view he states : ^ —
" By parity of reasoning it would seem that I might
say to a chronometer maker : * The gold and the iron in
this timepiece, and, in fact, all the substances of which it
is constructed, are parts of the material universe, therefore,
the property of mankind at large. It is very true that
your skill and labour have made a wonderful piece of
mechanism out of them, but these are only improvements.
1 "Natural Rights,*' Nineteenth Century^ February 1890, p. 191.
368 DEMOCRACY VERSUS SOCIALISM part v
Now you are quite entitled to claim the improvements,
but you have no right to the gold and the iron, these
belong to mankind.' "
The error in this argument is so obvious that it ought
not to have remained undetected by a much lesser man
than Professor Huxley. It is the same confusion between
common and equal rights previously exposed. Men have
equal rights to land, because they are equally dependent
upon the use of land for the maintenance of their lives.
Their equal right does not, therefore, as does a common
right, prohibit the use of the land by any one of them with-
out the consent of all others. On the contrary, each of them
is free to use the land without permission from any one,
provided he infringes not the equal rights of all others.
If, then, a man uses the land for the purpose of extracting
gold and iron from the same, he has as much right so to
use it as in any other way. The gold and the iron so
extracted by his labour become his exclusive property,
provided that by extracting them he has not infringed the
equal right of all others to the use of land, i.e. that he does
not use land for this purpose which gives him advantages
greater than all others can obtain from the use of other
land. If he uses land which gives him such advantages,
his title to the gold and silver is vitiated till he has com-
pensated all others for this infringement of their equal
rights, i.e. till he has restored equalness. Provided he has
done so, the chronometer maker's exclusive right of
property in the gold and iron is not only compatible with
the equal right of all men to the " material universe," but
is a necessary consequence of such equal right.
It may be contended that the recognition of exclusive
property in a " part of the material universe," i.e. gold and
iron, admits the possibility of exclusive property in all
parts, i.e. the whole of the material universe. This con-
tention, however, overlooks the essential difference between
the ownership of labour-products, composed as they must
be of matter, and the ownership of the material universe,
the land. The difference may best be illustrated by con-
trasting exclusive property in a fish taken from the ocean,
and exclusive property in the ocean itself. The one does
CHAP. 11 OBJECTIONS TO PRINCIPLES 369
not infringe equal rights. All others may equally take
fish from the ocean. The other does infringe equal
rights ; no one but the owner may take fish out of the
ocean. If any one does, the fish rightfully belongs to the
owner, not to him. Property-rights in land, therefore,
instead of being identical with property-rights in matter
separated from the land, deny such property-rights to all
but the owners of land.
Lastly, Professor Huxley sets himself to prove that
if labour is the basis of exclusive rights of property, land
must be subject to exclusive property. As follows : — ^
" In a state of nature, I doubt if ten square miles of
the surface of the chalk -downs of Sussex would yield
pickings enough to keep one savage for a year. But
thanks to the human labour bestowed upon it, the same
area actually yields, one way or another, to the agricul-
turist the means of supporting many men. If labour is
the foundation of the claim to several property, on what
pretext can the land, in this case also, be put upon a diflFerent
footing from the steel pen ? "
The arguments previously used — the distinction drawn
between property-rights in the source of all matter, the
material universe, and property-rights in matter separated
from this source — evidently apply to this contention as
well. For labour spent on land cannot add to the desir-
able matter contained in it ; it can only make such matter
more accessible. Clearing, fencing, draining, the erection
of farm - buildings, and similar improvements are made
for the purpose of giving easier access to the elements of
fertility in the soil ; as mining improvements are made
to give easier access to minerals below the soil. In either
case, the object in view is the withdrawal of desirable
matter from the land. Even manures are frequently
applied for the purpose of freeing otherwise insoluble
ingredients of the soil ; and in other cases are added in
order to restore elements previously extracted, and to be
themselves again extracted almost at once.
The labourer is entitled to exclusive property in the
^ "Natural Political Rights," Nimtienth Cmtury, February 1890, p. 192; Method
and Results (Esiaya, voU i,), p. 374.
2 B
370 DEMOCRACY VERSUS SOCIAUSM part v
additional accessibility due to his past labour, as he is
entitled to exclusive property in all the matter which, owing
to this greater accessibility, he separates from the land by
present labour. But he cannot be entitled, by virtue of his
labour, to exclusive property in the source of the desirable
matter, the land itself, for the reason that his labour did
not and cannot add to it.
Moreover, it may well be questioned whether the
additional productivity of the Sussex land, which Professor
Huxley posits, is all due to previous labour bestowed upon
the land. For if a savage were placed upon this land in
its present state, he, having no knowledge of agriculture,
might derive from it no more and probably less susten-
ance than if it were still in a state of nature. The greater
part of the additional productivity of the agriculturist's
labour on this land is due, not to labour previously
applied to it, but to advances in the knowledge of present
labourers, and to the social environment which furnishes
them the means of applying this knowledge.
Nevertheless is it true that all the productivity of this
land, due to present and previous labour exercised upon it,
whether it is little or much, is rightfully private and exclu-
sive property. And it follows from the hypothesis that
all that productivity which is not due to labour exercised
upon it, i.e. to improvements, cannot rightfully be private
and exclusive property.
Suppose this land, in its present state, instead of being
situated a few miles from London, were situated five
hundred miles from any centre of population. Would
its productivity, the wealth which it yields to labour, be
as great as it is in its present situation ? Evidently not ;
its productivity would be less. Its favourable situation,
therefore, forms part of its productivity. Labour exer-
cised upon this land did not create this favourable situa-
tion, cannot, therefore, give any right to private and
exclusive property in the productivity hence arising.
Suppose, again, land situated as favourably, and on
which equal labour has been expended, but endowed with
less natural fertility. Such land also would possess less
productivity. Some part of the present productivity of
CHAP. II OBJECTIONS TO PRINCIPLES 371
Sussex land, therefore, may be due, not to previous labour,
nor to situation, but to its greater natural fertility than
other land which must be used. This part of its produc-
tivity, like that arising from more favourable situation,
therefore, also cannot rightfully become private and ex-
clusive property.
Whichever way, therefore, the question is looked at,
labour expended in improvements on land, while giving
exclusive property in such improvements, cannot give
private and exclusive property-rights in the land itself.
CHAPTER III
THE METHOD OF REFORM
The main propositions, previously established and vindi-
cated in the last chapter, are : —
All men have equal rights to the use of land, and
each of them is entitled to the exclusive possession of all
the wealth which his labour produces or his services pro-
cure, provided he infringes not the equal rights of all
others. Disregard of the equal right to land necessarily
involves violations of the unequal right to wealth. Social
injustice in the production and distribution of wealth thus
arises from the disregard of the equal rights of all men to
the use of the earth. Hence social justice cannot be
achieved till, through the recognition of the equal rights
of all to the use of land, each of them is made free to
produce as much wealth as his capacity and industry
enable him ; and till, through the abolition of all private
monopolies and of the taxation of justly acquired wealth,
each is secured in the exclusive possession of all the wealth
which his labour produces or his services procure through
free contract with its producers.
And further : All men and women being members
of a social body, the sole object for which a social body
exists being to secure the greatest aggregate sum of happi-
ness to its members ; such happiness being unattainable
except through the establishment and maintenance of
justice— justice demanding the recognition of the equal
rights of all to the use of land, and the individual right of
each to the produce of his labour ; it is the paramoimt
duty of every social body to frame and enforce regula-
CHAP. Ill THE METHOD OF REFORM 373
tions which will safeguard these rights for every one of its
members.
That the land of civilised nations is now owned by
some to the exclusion of others ; that consequently the
equal rights of the majority of the members of every
State are violated, cannot affect this duty. Were men
now for the first time confronted with the question how
land shall be dealt with ; were a body of men now to
discover an uninhabited and fertile island ; the rights of
each of them would be no greater and no less than the
rights of those who live in countries where all the land is
held as private property. For violation of rights does
not abolish or even lessen rights. All the difference which
can be claimed is, that the establishment of justice could
inflict no hardship in the former cases ; while in the latter
case it might inflict hardship upon some of the persons
who profit and have profited by existing injustice. On the
other hand, however, it must not be forgotten that the
continuance of private ownership of land and con-
sequential injustice, inflicts hardship, and inevitably much
greater hardship, not only once but perpetually, upon
those far more numerous persons who are injured by it.
All that can be claimed on behalf of those who profit by
social injustice, therefore, is, that the injustice shall be
removed in a manner, which, while inflicting no avoidable
hardship upon them, shall not needlessly prolong or
aggravate the hardship of the victims of social injustice.
Hence the substitution of the equal rights of all for the
unequal rights of some to the land, having as its aim the
greatest production and the just distribution of wealth,
must be effected in a manner which will avoid all unneces-
sary hardship to both classes.
Other conditions must be observed. A sudden intro-
duction of great and far-reaching social changes, however
just, not only inflicts the maximum of temporary hardship
on the whole people ; not only generates new evils more or
less lasting, but places the change on insecure foundations.
The hardships and evils unnecessarily provoked cause a re-
vulsion of feeling, and may result in reaction, restoring con-
ditions analogous to those which it was intended to remove.
374 DEMOCRACY VERSUS SOCIALISM partv
Moreover, it may well be questioned whether the masses
of the people are as yet fit to live under conditions ot
absolute social justice. The industrial warfare between
employers and employed would inevitably be aggravated
by any sudden and radical alteration in the relative power
of the combatants. The workers largely made inde-
pendent of capitalistic employment, lacking the experi-
ence and moral development necessary for the co-operative
conduct of industries, would misuse their newly acquired
power, as power has been misused by the capitalistic classes.
When, however, by slow increments of justice, general
conditions are improved gradually, there will take place
such a gradual moral growth, as will ultimately enable men
to live under conditions of absolute justice. For all these
reasons the sudden transformation of unequal into equal
rights to land must, if possible, be avoided.
The essential condition for the most productive use of
land is security of possession of the land, and of all im-
provements effected on the land. The absence of such
security, where, as in the United Kingdom, land is mainly
used by tenants ; or where, as in most other countries,
the nominal owner is heavily indebted to a mortgagee, is a
main cause of the inferior and inefficient use of land. The
contemplated reform, therefore, must be effected in a
manner which will give to the users permanency of posses-
sion in the land and assurance of full compensation for
improvements on their relinquishing such possession.
With the same object in view, the most productive
use of land, there must be avoided aU interference with
individual control over the use of land. No State official
must be allowed to dictate to the possessor of land in
which manner and for what purposes the land must be
used. On the other hand, the reform must be effected in
such manner that the self-interest of every holder of land
compels him to place it to the most profitable use.
Leaving ethical considerations mainly to be dealt with
in the succeeding chapters, the present one will be de-
voted to the comparison of the several, theoretically
possible, methods of reform, with regard to their economic
and political advantages and disadvantages.
CHAP. Ill THE METHOD OF REFORM 375
One such theoretically possible method is the purchase
of the land by the State. Its necessary consequences would
be : purchase of all improvements where the selling owner
did not desire to lease the land from the State, and leasing
the land, either in perpetuity, with regularly recurring
adjustments of rent and sale of improvements, or for short
periods at a fixed rental, including interest for improve-
ments.
As no government is possessed of the necessary wealth,
the purchase would have to be made with interest-bearing
bonds. The interest charge thus created would, however,
enormously exceed the rent and interest which the State,
for many years, could receive for the land and improve-
ments. For these reasons —
It has already been shown ^ that, in addition to natural
rent, there arises under private ownership a spurious rent,
the result of the non-use or partial use of land. This
spurious rent not only adds to the capital value of the
unused or partially used land, but also to the value of all
the land fully used, and in addition confers a value on
some land which is not required for present use. Apart
from this great and fictitious increase in the value of land
thus arising, there is engendered an additional and specu-
lative value of some land.
Wherever exists even a remote possibility of land
increasing in value in the future, land bears a price in
excess of the capitalisation of its present rental value.
The anticipated future increase in rental value is discoimted
in advance. This additional and speculative value increases
with every increase in the probability of the future advance
of rental value. The action of this force, though not
confined to this limit, may most clearly be discerned in the
neighbourhood of growing towns and cities. Surrounding
land used for grazing or agriculture, or not used, is bought
and sold at prices which many times exceed its value as
grazing or agricultural land. Though both sellers and
purchasers know that all this land cannot be required for
building purposes for perhaps a century to come, yet each
of them buys and sells, on the possibility or probability of a
^ Part II. chap. viii.
376 DEMOCRACY VERSUS SOCIAUSM party
particular piece of land being so required in the near
future.
These causes of artificial values, existing everywhere,
are most active in quickly progressive countries. In the
United States, Australia, South Africa, and other new
countries, the areas of valuable land unused, or only partly
used, are very large. Speculation in land is also generally
active, and from both these causes the artificial value
adhering to land is very great.
As soon, however, as the Government would have pur-
chased the land all this artificial value would disappear.
The land not needed by the people would pay no rent ;
the rent paid for other land would be far less than the
expectation on which its capital value rested. The rent
would, therefore, fall far below the interest charge on the
purchase value of the land. To the loss so incurred must
be added a loss on the purchase of improvements. Im-
provements may be antiquated and much the worse for
wear and tear and yet fully serve the purpose of the owner
in inferior uses of land. Others may be serviceable for
some purposes and unserviceable for others. When the
land is taken from owners who refuse to continue pos-
session on lease all the improvements on such land will
have to be purchased at full value. New lessees, however,
may, and generally will, prefer new improvements, and may
also want to use the land for purposes for which existing
improvements are of little or no value. In either case the
State would receive little or nothing for improvements
purchased at high value. This loss must be added to the
loss on land values.
The deficit thus arising would be enormous, might
even equal one-half the interest payable to dispossessed
landowners. There is only one way in which the revenue
necessary to provide for it could be raised, viz. by taxation
— either taxes on incomes or taxes on labour -products
through customs and excise. Already, in most countries,
the income-tax, yielding a comparatively small revenue, is
nevertheless reducing the wealth-producing power of the
people. While in some countries a small additional re-
venue may be derived from this source, its revenue-yielding
CHAP. Ill THE METHOD OF REFORM 377
limit has been reached in others. The principal part of
the additional burden would everywhere fall on labour-
products through customs and excise taxation. Even ir
taxes on imported goods were counterbalanced by equi-
valent taxes on locally-produced goods, so as to prevent
the creation of more private monopolies, the revenue which
the State would derive from this source would fall far short
of the sums which the masses of the people would have to
pay. For manufacturers, importers, and dealers are com-
pelled to add the tax to the cost price of their goods, and,
making the average profit on their cost, must make such
profits on the tax as well.
Even if it were possible to raise the requisite and huge
amounts from this source, which may well be doubted,
there would arise an aggravation of existing injustice — the
State would appropriate more of the products of individual
exertion. Moreover, such taxation falls mainly on the
poorer classes of the people ; these, instead of being re-
lieved, would therefore be still further injured by the State
purchase of the land.
The classes so injured comprise not only the bulk ot
the landless men, but the great majority of landowners
themselves, the owners of small areas of agricultural land
and of cheap building sites in villages, towns, and cities.
The additional taxation would generally take from them
more than the interest on the bonds received by them
could amount to. Their land, therefore, would not
be purchased, it would be confiscated, and in addition
they would have to provide part of the interest pay-
able to the owners of larger areas and of more valuable
land.
The entire object of the reform, therefore, would be
missed by this method even if it were practicable. Pro-
duction would be hindered by additional taxation as much
as it would be fostered by the establishment of equal rights
to land, and the new taxation added to existing ones would
immensely aggravate the existing violation of individual
rights. Instead of unnecessary hardship being avoided,
the utmost hardship would be inflicted upon the victims
of existing injustice. Perpetuated under another name —
378 DEMOCRACY VERSUS SOCIALISM part v
interest instead of rent — injustice would be aggravated
instead of being removed.
New evils also would arise. After the Government
had acquired the land it would have to fix the rental of all
land, and would have to select the persons to whom leases
are to be granted for land relinquished by previous owners,
as well as to determine the area leased to any one, and in
many cases its use. If perpetual leasing at variable rents
were the system adopted, this interference would take place
once ; if terminable leases at fixed rents were adopted, it
would have to take place at perpetually recurring intervals.
Two systems are possible. Government officials may
determine the area of each holding, and award each to
the person offering the highest rent. In this case rack-
renting would arise, unjustly diminishing the reward of
labour and augmenting rent, though not perhaps to the
existing level.
Or the officials, having determined the area of each
holding, themselves fix the rent and award possession to
applicants selected by themselves or by ballot. The ballot
system, however, has been found liable to abuses, to which
the term "dummying" has been applied in Australia.
These abuses may, perhaps, be worse than those which
result from official selection. In either case the temptation
to favour particular individuals by awarding them land at
exceptionally low rentals, or giving them a preferential
opportunity so to acquire it, would be irresistible. Jobbery
and corruption in the one case, rack-renting in the other,
therefore, are unavoidable and additional results of land
nationalisation by purchase.
Reflection will show that purchase of the rental valUe
of land, exempting improvements, must lead to similar
results as purchase of the land itself. Both these
methods, therefore, fail to comply with the conditions
laid down.
The confiscation of the rent of land is another method
which might be considered. Apart from the question
whether this method is practicable — whether it can be
employed without provoking civil war — slight considera-
tion shows that, in addition to the unavoidaole suddenness
CHAP. Ill THE METHOD OF REFORM 379
of the change, it would inflict the utmost hardship on both
landowners and landless men.
Present owners of land, suddenly deprived of the rent
which to many is the main source and to some the only
source of income — unaccustomed as many of them are to
any productive labour — would be exposed to hardship
approaching injustice. Nor could the landless classes
escape. A large proportion of the latter is employed in
the production of goods and services which are demanded
by the wealthy classes alone. The sudden appropriation
of rent and monopoly charges by the State would largely
reduce the incomes of all wealthy persons, and would
absorb the incomes of many. The sudden cessation of
their demand for luxuries and services would destroy the
opportunities of employment in this direction without im-
mediately providing employment in other directions. To
both these classes, therefore, the confiscation of rent would
be provocative for a considerable time of widespread hard-
ship and distress. For this reason, as well as on account
of its inevitable suddenness and of the necessity of govern-
mental interference in the use and disposal of land, the
confiscation of rent also fails to offer any adequate solution
of the question under consideration.
There remains but Henry George's Single Tax method,
consisting of the gradual appropriation of the rent of
land and of natural monopolies and the similarly gradual
removal of all other taxation and charges for the use of
equal natural and social opportunities. This method,
proceeding slowly and gradually, would not disorganise
industry nor inflict appreciable hardship on any one. The
great majority of landowners would benefit more by the
removal of taxes and charges than they would forgo by
the loss of the rent of their land. The owners of large
areas or of exceptionally valuable land would lose more
than they would gain, but at first the loss would be un-
important. Before it could reach important dimensions
many of the existing owners would be dead, and the re-
maining ones would either have adapted themselves to the
new condition by qualifying for productive occupations,
or would find consolation in the wealth remaining to them.
38o DEMOCRACY VERSUS SOCIALISM part v
The hardship, if any, to the owners of land would thus be
minimised, while the masses of the people would derive a
great advantage from the first introduction of the system,
an advantage which, growing with its extension, would
culminate with its completion. For the imposition of even
a small tax on land values, especially if its augmentation
be apprehended, would lower rents, induce a more efficient
use of land, increase the demand for labour, and therefore
tend to increase wages. For these reasons : The owners
having to pay the tax on the rental value of land, and not
according to the income which the use of the land yields
— having to pay the same amount whether the land is used
and yields an income, or whether it is unused and yields
no income — would either themselves use the land in the
most advantageous way, or let or sell it to others who
would so use it. There would thus arise a greater com-
petition between landowners for tenants and buyers, and
consequently a fall in the capital and rental value of land ;
there would arise a greater demand for labour to work
upon land — whether urban, agricultural, or mining land —
and consequently an increase in the reward of labour.
Other forms of taxation being simultaneously reduced,
the increased earnings of labour would be less infringed
upon by the State, and monopolies based upon such
taxation would gradually disappear. Higher money wages
and lower prices of labour-products would thus combine
to enhance the well-being of the masses of the people, and
the consequent increase in their consumptive power would
tend still further to increase production and the demand
for labour. Every addition to the tax on land values, and
every further reduction of other taxes, would strengthen
these tendencies, until, with the completion of the system,
there would have arisen an enormous consumption and
production of wealth, an illimitable demand for labour,
and a distribution of wealth which, denying reward without
service rendered, would secure to every one a reward equal
to the value of the service rendered by him.
The gradual appropriation of the rental value of land
would thus secure equal rights to land and unequal but
equitable rights to labour -products, without appreciable
CHAP. Ill THE METHOD OF REFORM 381
hardship to any one, and so gradually as not to provoke
reaction or to disturb industrial organisation. Yet the
land would be as effectually nationalised as if it had been
appropriated by the State. For, as previously shown,^ the
value of land is nothing else than the price some people
are willing to pay for the power to levy tribute upon
present and future users of land. As land-values fall and
rise with the fall and rise of rent, land-values would dis-
appear if rent disappeared. Likewise, if the whole rent
of land goes to the State, private persons will not give
wealth in exchange for land. Land would lose all market
value, would no longer be bought and sold, and as society
would receive all that benefit from land which is not due
to individual labour, the collective ownership of rent
nationalises land as effectively as the collective ownership
of the land itself.
There would, however, be a total absence of the inter-
ference of State officials, unavoidable when the land itself
is made collective property. Present owners can be left
in possession, and would gradually transfer to users any
land which they themselves could not use to fullest
advantage, while unused land could be appropriated by
any one desirous of using it without let or hindrance.
The rental value of land can be assessed, and the tax can
be collected periodically by local bodies, from whose
assessment appeal can be made to a revision court, either
by the aggrieved party against over -assessment of his
land or by any one for under-assessment of others' land.
The rent which the State receives would thus fall and rise,
not through the caprice of officials, but through natural
causes. Likewise, the area allotted to each and the use
made by him of it would, when the tax is paid on rental
value without rebate for inferior use, be determined by the
capacity of each and by social necessities finding expression
in price, in a manner most advantageous to society and
without governmental interference.
At the same time there would prevail the most
absolute security of possession both of the land and of
improvements made on the land. As long as any man
1 Part II. chap. iv.
382 DEMOCRACY VERSUS SOCIAUSM party
paid the rent periodically assessed no one could dispossess
him or his heir or assignees unless the land were required
for public purposes. In such case, or whenever any
holder of land wanted to dispose of it to any one else, the
value of improvements alone would be paid for. This
security would lead to the fullest use of land, to the most
extensive application of labour and capital ; while land,
having no rental value, land at the margin, could be used
without payment of rent or tax of any kind till such time
as increase of population and extension of public works
had given it a value.
The Single Tax method of securing equal rights to
land, therefore, avoids the objections which adhere to all
other methods. There would be no avoidable hardship,
no sudden and profound change in social relations, no inter-
ference by State officials with the allotment and use of land,
and no power to fix rents arbitrarily or enforce rack-rents.
The exaction of the rent charge would compel holders to
make the most profitable use of all land, and at the same
time there would arise the most absolute security of
possession by the users of land.
The monopoly-use of land for social purposes, as in
the case of railways, tramways, canals, and in the supply
of gas, electric light, and power, and of other commodities
the supply of which depends upon special privileges in the
use of land, lends itself to the same treatment. The
value of such properties is seen easily in that of their
share-capital and debentures. Deduction from this total
value of the value of labour -products owned by the
company reveals the value of its monopoly-rights. This
value, therefore, could be taxed in the same manner as the
value of the ownership of other land, and would gradually
disappear under taxation.
Nor would such taxation lead generally to an increase
of the price charged by these monopolies for the services
which thty render. For this price is generally not deter-
mined by competition, but by the consideration of greatest
total profit. Where this is the case, an increase of price,
far from recouping the monopoly owner for taxation,
would, by reducing consumption, augment the reduction
CHAP. Ill THE METHOD OF REFORM 383
of the total profits. Taxation, therefore, would secure to
the whole people the value of the monopoly without
necessitating public management of the industry.
There are, however, other considerations which may
be urged for a different ultimate treatment of these mono-
polies. Railways, tramways, and canals are as much high-
ways as ordinary roads and streets. The considerations
which have led to the public ownership of roads and streets
apply with even greater force to these modern routes of
communication, and the reasons which have caused the
almost universal abolition of tolls on roads and streets
equally apply to them. Cheapness of transport stimulates
production and aids in the development of national resources.
Private control of public highways leads to inequality of
treatment and corrupt practices.
It is, therefore, in the highest degree desirable that
these modern highways also shall be owned by society,
and, like all others, shall be open to public use without
charge. But there is as little necessity for the State
conduct of the transportation business over railroads, tram-
roads, and canals, as there is for the State conduct of this
business over ordinary streets and roads. For the owner-
ship of locomotives and other motors, of cars and boats, is
not a monopoly. The monopoly resides in the ownership
of the road. The State, therefore, may acquire the road,
and regulating the traffic so as to ensure safety and
equality of treatment to the users of the road, may throw
open the business of transportation to free competition.
Just as no charge is made to recoup the State for the
expense of making and maintaining ordinary roads, no
charge need be made for the use of these roads. The
State would be repaid, and repaid abundantly, by the
consequent increase in production and the value of land.
And just as competition between carriers secures to the
public the advantages which have arisen from the abolition
of road-tolls, so would competition between carriers over
railways, tramways, and canals secure to all the advantages
arising from their free use. For such carriers owning
locomotives, cars, motors, or boats would compete with
each other over every road and canal, and such com-
384 DEMOCRACY VERSUS SOCIALISM part v
petition would result in the lowest rates for the carriage
of goods and passengers, in the readiest adoption of new
inventions and improvements, and in immense advantages
to all industries.
The supply of gas, water, electric light and power,
and of pneumatic and hydraulic power, however, is not
open to the same treatment. Here the choice lies
between absorption of the monopoly value by taxation or
collective conduct of the industry. The objections to the
municipal ownership and conduct of such industries, while
not without weight, are nevertheless much less serious
than those urged against the socialisation of unprivileged
industries. For not only is the resulting bureaucracy far
less numerous and powerful, not only would there remain
freedom of employment, but the loss of efficiency also
would be less serious. For these privileged industries,
economically and ethically distinguished from unprivileged
industries, are also industrially distinguished. Dealing
with the supply of goods and services not subject to varia-
tions in quality, design, colour, and shape, the demand^for
which can be estimated with facility, these industries can
be managed by permanent officials with less loss of
efficiency than other industries. Moreover, as private
monopolies, they are now generally managed with less
efficiency than competitive industries, and the further loss
of efficiency arising from municipal management would,
therefore, be minimised. Nevertheless, such loss might
arise, and to it must be added a tendency towards corrupt-
ing municipal government as well as the possible domina-
tion of the municipality by its servants. On the whole,
therefore, it seems preferable to treat these monopolies
also by the Single Tax method, i.e. appropriating the
monopoly-value adhering to them by a gradually extend-
ing system of taxing the monopoly-value and leaving the
conduct of the industry in the hands of private proprietors
and their employees.
CHAPTER IV
THE ETHICS OF COMPENSATION
To many minds convinced of the injustice of private
ownership of land and monopolies, their abolition without
compensation seems nevertheless unjust and arbitrary.
As a rule, however, the demand for compensation is urged
by the defenders of private ownership of land, by those
who deny that it involves any injustice. Their demand
for compensation is, however, illogical. For if the private
ownership of land and legal monopolies rests on the same
ethical basis as the private ownership of labour-products,
the compulsory appropriation of land or of the rent of
land, and the abolition of private monopolies, would
constitute a glaring act of injustice, even if the fullest
compensation were p^d. If private property in these
things involves no injustice, if it infringes no rights, its
compulsory abolition would be an act of violence as
purposeless as it is arbitrary, compensation or no com-
pensation. The question of compensation, therefore,
cannot arise unless it is admitted that justice demands the
establishment of equal rights to land and to inevit-
able monopolies, and the abolition of all unnecessary
monopolies.
The upholders of existing conditions who demand
compensation are illogical in other respects. They deny
the existence of equal rights to land on two grounds.
One exemplified by Lord Bramwell is as follows : ^ —
" Be it that there are natural rights, that is, in a state
of nature, where there is nothing artificial. But men have
^ Land and Capital, p. 2. (The italics are Lord Bramwell'i.)
2 C
386 DEMOCRACY VERSUS SOCIAUSM party
formed themselves into a social state ; all is artificial and
nothing merely natural. In such a state no rights ought
to exist but what are for the general good — all that are
should. And what we have to consider is — whether
private or separate property in land is good for the com-
munityy
This reasoning obviously excludes all ethical con-
siderations. It is not a question whether private property
in land is unjust, nor whether its abolition with or with-
out compensation is unjust, but whether either is good for
the community. What is good for the community must
be decided by some one or many. Who is he or who are
they } It cannot be denied that when ethical guidance is
abandoned, this question cannot be decided authoritatively
except by the governing body, be it an autocrat, an
oligarchy, or a majority of the whole people. Whenever,
therefore, this governing authority decides that the aboli-
tion of private property in land, without compensation,
is "good for the community," the governing body
"should," according to Lord Bramwell, so abolish it.
Seeing that natural rights do not exist within a society,
that "no rights ought to exist but what are for the
common good," the owners of land can have no right to
compensation when compensation is found not to be for
the common good.
The other reasoning is exemplified in the following
passage : ^ —
"Nothing also in morals is more plain than that to
abolish without compensation that private ownership which
has existed for countless generations, and on the faith of
which tens of thousands of men in all ages and lands, and
with the sanctions and under the guarantees of the laws
of all nations, have invested the fruits of their industry
and their thrift, would be an act of simple, gross, naked,
gigantic robbery."
This reasoning bases the claim for compensation upon
the hoary antiquity, the governmental sanction, and the
purchase of land with the fruits of individual industry.
Without inquiring here whether private and fuU owner-
^ Lecky, Democracy and Liberty^ voL i. p. 175.
CH. IV THE ETHICS OF COMPENSATION 387
ship of land " has existed for coundess generations in all
ages and lands," ^ it will be admitted that if the facts on
which Mr. Lecky relies justify his conclusion with regard
to property in land, they compel the same conclusion with
regard to property in all other things. Any property
rights which can or could show the combination of great
antiquity, general sanction, and frequent sale and purchase,
can or could not be abolished without compensation. The
abolition of protective duties and the abolition of rotten
boroughs in Great Britain, and, above all, the abolition
of slavery without compensation must then be held to
have been **acts of simple, gross, naked, and gigantic
robbery."
For while property in all these things had been
recognised for ages, had received general sanction, and
had been subject to sale and purchase, this is especially
true of slavery. For slavery, far more truly than private
ownership of land, may be described as having " existed
for countless generations in all ages and lands . . . under
the sanction and guarantees of the laws of all nations,"
and "tens of thousands of men have invested the fruits
of their industry and thrift" in slaves. Yet not only
was protection and the system of rotten boroughs in
England abolished without compensation, but slavery, with
one exception, was likewise so abolished.
The one exception is the compensation given by the
British Parliament to the West Indian slave-owners. Even
the landlord Parliament of that time, however, did not
stretch its sympathy with the landlords of the West Indian
islands so far as to make the abolition of slavery dependent
upon the slaves themselves compensating their owners. It
compelled the white slaves of the United Kingdom to
^ It it denied by all hiitoriani of national economy, amongtt them by one of the
bitterest opponents of the Single Tax theory, in the following terms : —
" That individual ownership of land is of comparatively recent institution ... $ that
even when the private ownership of land was instituted, rights of property were coupled
with political and military duties and fiscal obligations, which constituted no inconsider-
able compensation to the community for the loss of its interest in the land ; and, finally,
that these political and military duties and fiscal obligations have been thrown off by
the land-owning class, through die exertion of their superior power and influence in the
formation of public policies and in the enactment of laws, without any adequate com-
mutation thereof; these things seem to me too well established to admit of question.*'
— Land and its Rent, by F. A. Walker, pp. 128, 129.
388 DEMOCRACY VERSUS SOCIALISM part v
furnish the larger part of the compensation which gave
freedom to the black slaves of the West Indies. But can
it be argued that if the people of Great Britain had refused
to make this sacrifice, British soldiers and police would
have been morally bound to compel the West Indian
slaves to work for their masters to all eternity ? Suppose
the West Indies to have been an independent State.
Would the slaves have lost all right to freedom unless
they themselves, or some foreign people, paid their full
value to the owners ?
Or suppose a slave escapes from a country in which
slavery still has legal existence, and finds refuge on board
a British vessel. Is the slave a thief who has stolen his
value from his owner, and is the British captain an
accessory to the theft, unless they pay compensation?
If it be admitted that the escape of one slave does not
constitute a theft, does a case of theft or robbery arise
when more than one, or all slaves, escape from bondage ?
Must they be considered to be morally still the property
of their previous owners till compensation has been paid ?
If not, if they are justified in escaping from their bondage
without compensation in an illegal way, are they not
doubly justified in doing it in a legal way ? May they
not acquire the governing power of the country, and pass
a law abolishing their own slavery, without thereby incurring
the obligation to pay compensation ?
These considerations clearly establish the conclusion
that no moral claim to compensation can arise from the
abolition of slavery. Yet property in slaves was sanctioned
by all the conditions which Mr. Lecky adduces as sanc-
tioning private property in land. If these conditions do
not impose the duty of compensation in the one case,
they obviously cannot do so in the other case.
It is, however, alleged that the ethical distinction
between property in slaves and property in land is so
great that considerations applying to the one property
cannot be applied to the other property. In previous
chapters^ it has been shown that this contention is
erroneous, that land-owning is essentially of the same
^ Part III. chaps, vl. and vii.
CH. IV THE ETHICS OF COMPENSATION 389
ethical character as slave-owning. But this question does
not arise here. Mr. Lecky does not draw any ethical
distinction between property and property. He wisely
bases the sanctity of property in land and the demand
for compensation, not on ethical considerations, but on
the conjunction of three alleged facts — long persistence,
governmental sanction, and investment. If these by
themselves are insufficient to establish a claim for com-
pensation in all cases, the abolition of property in slaves
included, they are equally insufficient to establish this
claim on the abolition of any particular form of property,
property in land included.
So far the claims for compensation on the part of
those have been considered who deny that it is the duty
of society to enforce the equal right of all its members
to land. There remains to be considered the claim of
those who are convinced that all men have equal rights
to land, and that the denial of this right deprives the
majority, or even large numbers of men, of part of the
product of their labour. Their demand for compensation
arises mainly from two conditions. One is custom ; the
existence of unjust laws, obscuring primary morality, leads
to the formation of secondary views of morality. To
break the law, or to alter an unjust law, when such alter-
ation deprives any one of unjust advantages, is regarded as
more immoral than the maintenance or such laws. . . .
The moral claim of the victims of unjust laws to a restora-
tion of their rights is obscured by the false view that
there has arisen a moral claim on the part of the bene-
ficiaries to enjoy for all time the advantages which the
unjust law has hitherto secured to them.
The second cause for this demand is a special one.
Land Nationalisation, the acquisition of the land itself by
the State, was, till Henry George published Progress and
Poverty y generally regarded as the only measure by which
the equal rights of all to land could be secured. This
plan can be carried out either by the acquisition of one
piece of land after another, or by the State acquiring all
the land by a sudden act. If the former method be
adopted, some landowners would continue in the foil
390 DEMOCRACY VERSUS SOCIAUSM part v
enjoyment of rent, while others would be deprived of it.
The injustice of this procedure to the latter, without
compensation, cannot be denied. Nor can it be denied
that the sudden confiscation of all land by the State, while
not unjust, would inflict hardship so great as to approach
injustice. Under such circumstances the demand for
compensation, even of those who recognise existing in-
justice, was natural and inevitable.
Under Henry George's Single Tax system, however,
both these causes of partial injustice are avoided : all
landowners are treated equally, and the transition from
unequal to equal rights in land is so gradual, and accom-
panied by such other benefits, that no hardship can arise.
The reasons which justify the demand for compensation,
when the clumsy method of Land Nationalisation is con-
sidered, do not, therefore, apply to the Single Tax system
of gradual reform.
If it is admitted that private ownership of land is a
continued injustice ; that it leads to the perpetual repeti-
tion of other acts of injustice ; that the proposed method
of reform treats all landowners equally and inflicts no
unnecessary hardship, on what moral grounds can com-
pensation be claimed ? Apart from its other consequences,
the essence of private ownership of land is that it gives
to landowners the legal right to take wealth from all
others without rendering any service. To claim that this
legalised system of theft ought not to be abolished without
compensation to the beneficiaries, is equivalent to the
declaration that it is just and ought not to be abolished
at all. For if the rent of land does belong to the com-
munity, if its appropriation by landowners is an act of
usurpation, how can it be held that the community must
purchase it? The claim for compensation, therefore, is
a direct denial of the right of all to the rent of land and
to equal rights in land.
Moreover, if compensation is paid, the injustice con-
tinues which enables a few to appropriate wealth belonging
to the many. For the interest on bonds given in com-
pensation, would enable the holders to extract even more
wealth from the community than they now do as rent,
cH.iv THE ETHICS OF COMPENSATION 391
and equally without rendering any service in return.
This fact, as well as the further result, that only the
wealthier landowners can benefit by compensation, while
the great majority of landowners would be injured by it,
has already been dealt with in the preceding chapter.
Compensation, therefore, is an absolute denial of justice —
would perpetuate and aggravate existing injustice under
another name.
Plausible reasons are advanced for compensation. One
is, that a majority of the people having hitherto sanctioned
private ownership of land, it must be held that all have
sanctioned it. This contention, however, is self-destruc-
tive, even apart from the consideration that the right of
unborn generations, as well as of those now living, is
involved. For if the sanction of a majority may be
construed to be a sanction by all in one case, it must be
so construed in all cases. Therefore, if a majority of
the people sanctions a law appropriating the value of all
land without compensation, it must be construed to be
sanctioned by all, landowners included. Hence the claim
for compensation on account of constructive general
sanction, is met by the equally valid claim for no
compensation based on constructive general sanction.
Another claim is that, as much land has been purchased
with labour-products, the abolition of private ownership
without compensation would be equivalent to the con-
fiscation of these labour-products. This claim overlooks
the obvious fact that purchase alone can give no moral
right to the thing purchased. In order to establish such
right in the purchaser, the seller must have a moral right
to sell, must be the rightful owner. Purchase of a slave
can give no moral right of ownership, because the seller had
no moral right of ownership in the slave. Can it be alleged
that any of the past sellers of land were the rightful
owners of the land.^ If they were not — a conception
necessarily involved in that of the injustice of private
ownership — the present holders also cannot be rightful
owners. Nor does the sanction by the State of the sale
and purchase of land, nay, not even sale by the State,
alter this position. Neither the State nor any individual
392 DEMOCRACY VERSUS SOCIAUSM part v
was morally the owner of the land; the title of every
owner of land is morally vitiated by the fact that neither
State nor individual holds or can hold a saleable interest
in land. The land belongs to no one ; the right to use
it belongs equally to all men, not merely to Qiose now
living, but to all the generations of men who ever shall
live on it. The notion that a body of men, mere passing
forms of matter, inhabiting this earth but for a brief
period of time, may for ever dispose of the earth, is
surely one of the strangest examples of that secondary
morality previously alluded to.
Moreover, it must not be forgotten that what present
owners acquired when they purchaised the land was not so
much the land itself as the legal right to appropriate rent, i.e.
to levy tribute on the present generation of their fellow-men,
and to transmit to others 3ie power to levy tribute on
future generations. No government, even with the consent
of all the present members of the State, can possess the
moral right to sell this power ; no purchaser can morally
acquire it, and no compensation can be claimed on the score
of morality from those who refuse to submit any longer to
this immoral exaction. If they refuse to pay it they con-
fiscate no labour-products — they simply refuse to allow any
further confiscation of their own labour-products.
The owners of land lose nothing positive when the rent
of land is appropriated by the State. The wealth they
gave for that rent is gone ; they exchanged it for the
power to levy tribute. No wealth taken by them in rent
or otherwise is demanded of them ; they simply lose the
power of levying further tribute. Granted that when they
bought the land they expected that soldiers and police
would for ever enforce this wrong. They have miscalcu-
lated, and cannot ask others to bear the resulting loss. If
they could claim compensation on the ground of their
disappointed expectation, all other persons who incur losses
because the State acts contrary to their expectation would
be equally entitled to compensation. On the passing of a
Usury Bill making illegal a rate of interest previously not
illegal, all those who had purchased the goodwill of a money-
lending business, or who had spent years in learning its
CH. IV THE ETHICS OF COMPENSATION 393
manifold intricacies and chicanery, would be entided to
compensation for the disappointed expectations that their
practices would not be interfered with by law. If a new
Company Act be passed endangering the safety of pro-
moters who indulge in practices not previously forbidden
by law — promoters who have invested the result of their
industry and thrift in showy office furniture and in
acquiring a widespread connection among touts and financial
journalists — they would be morally entitled to compensation
for the disappointment of their expectation of the continu-
ance of a defective law.
Still stronger would be the position of other claimants.
If Parliament passes an Electric Lighting Act, it necessarily
injures some gas company or dealers in other lighting
substances and appliances who, when they entered upon
their business, did not and could not foresee the use of
electric light. Similarly, when Parliament passes a Railway
Act, it necessarily disappoints the expectation of numerous
carters, hotel-keepers, tradesmen, and others, and frequently
reduces the value of property. In these and all like cases
compensation would be due.
Other claims are stronger still. Why should a protected
manufacturer be robbed of the power which Legislatures
have granted him of charging higher prices to his fellow-
citizens than he can charge to others ? Is not compensation
due to him also if the State deprives him of this valuable
property or reduces its value ? Or if, as has been done in
Ireland, laws are passed under which tenants are given
security of possession in the improvements which they place
on the land, which reduce rack-rents and abolish indebted-
ness incurred by tenants to landlords for non-payment of
past rack-rents ; or if by law railway rates are made less
extortionate, are not the landlords and railway companies
entitled to compensation for consequent loss of revenue
and reduction in the value of their property ?
Or consider this case : Contributions from the general
revenue to local rates transfer to the whole community
expenditure for purposes which add to and maintain the
value of the land in localities so favoured. The rental
value, as well as the capital value of land, and of nothing
394 DEMOCRACY VERSUS SOCIALISM part v
else, is increased by imposing upon the general taxpayer
expenditure which otherwise must be borne by the owners
of land, and from which they alone derive pecuniary
benefits. Suppose the Legislature, recognising the im-
morality of this action, were to refuse to enforce in the
future such confiscation of the rightful property of all for
the exclusive benefit of some landowners. Would the
Legislature act immorally if it discontinued paying aid to
local rates out of the general revenue without compensating
landlords for the resulting loss to them ? Could the fact
that landlords generally expected the continuation of the
present system, and that some purchased land at the higher
value resulting from it in the expectation of its continuance,
create the moral obligation to pay compensation ? If these
questions are answered in the negative, as they will be
answered by most, and in part have been answered by the
British and other Legislatures, it is admitted that the dis-
appointment of expectations cannot entitle to compensation.
If they are answered in the affirmative, all and every reform
of injustice is declared to be immoral. For whenever a
thoughtless or corrupt Legislature had granted a monopoly
or conferred an unjust advantage upon some at the expense
of others, its removal would be possible only on condi-
tion that the beneficiaries should retain their full power of
exaction in another form through compensation. Not only
would all reform be made impossible by the acceptance of
the doctrine that the beneficiaries of unjust legal privileges
cannot be deprived of such privileges without compensation,
but the tendency to corruption, which inevitably arises
when Legislatures grant monopolies, would be increased
manifold, and all monopolies would largely rise in value.
Another argument advanced is that the State appro-
priation of the rent of land, however gradually it might be
effected, would destroy the sanctity of property generally,
and would, therefore, inevitably lead to Socialism. This
argument obviously disregards any distinction between
that which morally is private property and that which is
not, as well as the results which have arisen from the
disregard of this distinction. For it is precisely the con-
fusion of unrightful property with rightful property which
CH. IV THE ETHICS OF COMPENSATION 395
has given rise to and maintains Socialism. Those who,
failing to observe this distinction, nevertheless see that
property rights are disregarded, that the labourer is daily
despoiled of his property, naturally revolt against the, in
these circumstances, hypocritical claim of the sanctity of
property. They condemn all property rights because
they fail to see that it is the maintenance of property
rights in monopolies which destroys the sanctity of property
in labour-products. Compensation perpetuating the viola-
tion of just property rights would also perpetuate the
revolt against all property rights. The reform here
pleaded for cannot be fully or even largely realised till a
majority of the people have become seized of this dis-
tinction. When they have become aware of it, the sanctity
of rightful property — of property in labour-products — will
have gained the secure and lasting foundation which it now
lacks. The appropriation of the rent of land and other
monopolies without compensation, therefore, alone can
secure full recognition for the sanctity of property —
compensation would tend to still further weaken that
recognition.
The argmnents on which the demand for compensation
is based are untenable. But it is not a question of
argument ; it is one of sentiment. Men hesitate before
adopting a truth fully; they desire compromise with
error. Could not existing injustice be removed without
depriving its beneficiaries of the advantage which they
derive from it ? This, unconsciously perhaps, is the desire
of those who, recognising existing injustice and desiring
its abolition, nevertheless claim that compensation must be
paid to those who benefit from it. This desire cannot be
fulfilled. Justice in the distribution of wealth cannot be
achieved without reducing the amount of wealth which
goes to those who receive more than their just share.
Reward cannot be proportioned to service as long as some
receive rewards for which no service has been rendered.
As fire and water cannot mingle, so it is impossible to
combine the removal of injustice with compensation to
those who benefit by injustice. Those who advocate the
one thereby oppose the other.
CHAPTER V
THE SUFFICIENCY OF THE REFORM
Though man can never foresee all the consequences of
even minor interferences with social relations, though for
this reason alone considerations of expediency offer no
reliable guidance for social conduct, yet it is not impossible
to foresee the wider results of any measure based on con-
siderations of justice. For, apart from the certainty that
measures founded on justice and recognised as such by the
community must work beneficially, it is possible to trace
social symptoms to their causes, to establish a causal
relation between unjust laws and resulting evils. Where-
ever this has been done successfully, it may be positively
asserted that the removal of the cause must, sooner or
later, lead to the disappearance of the resulting evils. It,
therefore, is possible to present in broad outlines a picture
of the changes in social relations which the gradual adoption
of the Single Tax system must produce.
Speculation in land, increasing its price, and, by holding
land out of use or full use, increasing the rent of all land,
becomes purposeless and injurious to the speculators when
the annual value of land must be paid in taxation whether
the land yields an income or not.^ Hence would arise
^ That even a small tax on land-values tends to restrict speculation in land and the
holding of land for inferior purposes, is admitted in the following passage taken from
The Report of the Royal Commission on the Housing of the fVorking Classes^ 1885 : —
"At present land available for building in the neighbourhood of our populoat
centres, though its capital value is very great, is probably producing a small yearly
return until it is let for building. The owners of this land are rated, not in relation
to the real value, but to the actual annual income. They can thus afford to keep their
land out of the market, and to part with only small quantities so as to raise the price
beyond the actual monopoly price which the land would command by its advantages of
position. Meantime, the general expenditure of the town on improvements is increasing
CH. V SUFFICIENCY OF THE REFORM 397
a fall in rent, increasing facilities for production and
increase in the demand for labour. To the direct benefit
of lower rents would thus be added the indirect benefits of
a greater demand for labour and higher wages.
This reduction in rent will be augmented by the
removal of all rates and taxes on improvements. Buildings
will not be erected unless there is an expectation that they
will return interest on the outlay in addition to all recurring
expenses. Hence any taxation of buildings restricts the
building of houses till the resulting scarcity forces up
house-rent to a level which will yield interest and tax.
When such taxation is removed, buildings will be erected
as soon as it is expected that rent will cover interest alone.
Hence a greater abundance of houses and a corresponding
fall in house-rent.
The purchasing power of wages, increased by this fall
in rent, will be still further augmented by a fall in prices,
resulting from the abolition of customs and excise duties,
stamp duties, and other imposts, and from the disappear-
ance of the monopolies to which such duties give rise.
More important than these changes are those which must
arise in the production of wealth. The absolute necessity,
arising from the appropriation of rent by the community,
of putting land to the highest use for which it is fitted,
enforces an enormous and constant demand for labour.
At the same time labourers can obtain land without being
compelled to part with any savings in its purchase.
Hence, in addition to an enormous demand for labour,
will arise a real independence of labour. So many
labourers will be able to employ themselves, and in the
absence of monopoly the anxiety of capitalists to employ
the value of their property. If this land were rated at, say 4 per cent on its telling value,
the owners would have a more direct incentive to part with it to thote who are desirous
of building, and a twofold advantage would result to the community. First, all
the valuable property would contribute to the rates, and thus the burden on the
occupier would be diminished by the increase in the ratable property. Secondly,
the owners of the building land would be forced to oflFer their land for sale, and
thus their competition with one another would bring down the price of building land, and
so diminish the tax in the shape of ground-rent or price paid for land which is now
levied on urban enterprise by the adjacent property owners — a tax, be it remembered,
which is no recompense for any industry or expenditure on their part, but is the natural
result of the industry and activity of the townspeople themselves. Your Majesty's
Commissioners would recommend that these matters should be included in legislation
when the law of rating comes to be dealt with by Parliament."
398 DEMOCRACY VERSUS SOCIALISM part v
labour will be so great, that wages must rise till they equal
the value of the product of labour.^
This point reached, there can never be witnessed such
a spectacle as, unfortunately, is only too familiar now —
men, willing and able to work, unable to find an oppor-
tunity to earn their bread. For when there are no
monopolies in which wealth can be invested, no wealth can
be saved except in forms which directly aid production
and which are consumed in production. All saving then
leads to increased production, increased production to a
greater demand for and reward of labour, and as the
workers receive the full product of their labour, con-
sumption can and will keep pace with production.* There
will then not necessarily be more wealth than now, at any
given time, but there will be an infinitely greater
production and consumption of wealth. General over-
production, involuntary idleness, and commercial crises
will have disappeared from social life.
Large fortunes also will disappear as undeserved
poverty disappears. Whoever examines such fortunes —
whether they are those of territorial magnates, as the
Dukes of Westminster and Bedford, the Earl of Durham,
the Marquis of Bute, or the Astor family ; or whether
they are those of commercial and industrial magnates, as
the Rothschilds, Rockefellers, Goulds, Vanderbilts, and
others — can see at once that they mainly consist, not of
real wealth, but of the value of monopoly rights. The
disappearance of private monopoly rights would, therefore,
cause the disappearance of the bulk of these large fortunes.
Some men might still earn large and even enormous in-
comes by rendering corresponding services, but such
incomes would no longer coalesce into large and per-
manent fortunes. For the permanency of all large
fortunes depends upon the possession of monopoly rights.
If they are invested, as under the Single Tax system they
would have to be invested, in competitive industries, they
are ephemeral. The power of any man to superintend the
employment of capital in competitive industries is limited.
If the capital so invested exceeds a certain limit, the
1 See Put II. chap. x. * Ibid.
CH. V ' SUFFICIENCY OF THE REFORM 399
supervision must be inefficient, losses must arise, and the
labour and anxiety are excessive. Hence, no one will then
desire to own such large fortunes ; and even if any one
should desire to do so, he would break down under the
strain of preserving it, while constant losses would
diminish its bulk. The ambition of men earning large
incomes would, therefore, be directed into other channels
than the accumulation of excessive fortunes. It would
probably take the direction of donations for public
purposes during the lifetime of the donors, to an extent
which cannot now be realised.
The gradual increase in the reward of aU labour and
diminution of large fortunes would tend to remove class
distinctions. When no one can live sumptuously without
labour ; when no one can ape the manners and customs of
those who live sumptuoudy without rendering service,
labour, which is still regarded as servile in spite of the
abolition of chattel slavery, will be no longer so regarded.
Society being thus levelled up and levelled down, the vices
which arise from excessive riches and extreme poverty will
alike disappear. Free education throughout all grades of
knowledge will still further tend to the removal of class
distinctions and to a greater coherence of society. The
working classes, able to save capital out of their wages,
and raised to a high level of knowledge, reasoning power,
and morality, will no longer be compelled to work for
wages. Forming themselves into joint-stock companies,
they themselves, in conjunction with other workers who
possess organising and managing ability, will be the owners
of the factories, farms, and mines in which they work.
Wage-industry will thus be superseded, gradually and
largely, by co-operative industry. Capitalists, as a separate
class, may not disappear entirely, but will be largely
reduced in number. Such organisers only as, on account
of their exceptional ability, can pay higher wages than can
be earned in competing co-operative establishments, can
attach a sufficient number of good workers to their service
for any length of time. Nor will the wage-worker entirely
disappear. Young men who have not yet saved enough
to acquire a share in a co-operative concern, the less able
400 DEMOCRACY VERSUS SOCIALISM part v
and steady workers, as well as some who have lost their
savings, will always form a residue of wage-workers. But
their number also will be enormously reduced. Capitalist
and labourer will generally be united in the same person,
removing the last tincture of the stigma attaching to hand-
labour, and producing a democratic society of unpre-
cedented homogeneity and cohesion.^
Long before this stage has been reached, all such
restrictive legislation as that against excessive hours of
labour and against unhealthy and overcrowded work-
rooms, as well as laws directed to ensure the safety of
workers and to fix a minimum of wages, will have become
objectless. For the workers, being mostly free to work
for a capitalist, or to employ themselves, stronger in
competition than capitalists when capital cannot be in-
vested in monopolies, will not enter employments which
do not offer favourable conditions in all these respects.
Capitalists will either have to comply with the standards
fixed by the workers, or pay higher wages to compensate
for conditions below this standard, or will be imable to
^ The following figures taken from the Statistical Registers (1897) of the Colonies
of Victoria and New South Wales show the small amount of capital required by
labourers to enable them to take their place as full partners in co-operative factories : —
Colony.
No. of workers
in factories.
Value of capital
in factories,
i,t, machinery,
plant, buildings,
and improvements.
Value of capital
per worker
employed.
Victoria
New South Wales
5M39
1^8,993,544
£9,974,228
£170 13 1
£190 8 I
American statistics, though less definite, nevertheless confirm this result. Tie
Abstract of the Eleventh Censm, 1890, gives the following figures : Capital of
manufactures and industrial works $6,139,397,785, average number of employees
4,476,884. The amoimt of capital for each employee would thus appear to be $1371
or j^274. As, however, the " capital ** recorded includes land-values and may also
include other monopoly-values, the amount of real capital will scarcely be larger per
worker than it is in the Australian colonies cited above.
Sir Benjamin C. Browne, President of the North-East Coast Association of Engineers and
Shipbuilders, Newcastle-on-Tyne, has favoured me with the following information : —
^^£150 is just about the amount of capital required per man in engineering, ship-
building, etc. in England. . . . For example, in my own works the capital account is,
including debentures, just below £600,000, and when fairly busy, but not extremely so,
we employ just about 4000 men. ... I think if you took £125 as a minimum
and £175 as a maximum you would be very safe, except for purely repair business or
where tome very exceptional circumstances arose."
CH. V SUFFICIENCY OF THE REFORM 401
obtain workers. At the same time, there would disappear
child-labour and the labour of married women in factories,
while such employment for unmarried women would either
be more and more shunned, or would be carried on under
greatly improved conditions. Fathers and husbands in
receipt of ample wages would as little think of sending
their wives and children into factories as do the members
of the middle class now ; and parents would not allow
their grown-up daughters to work there, except for short
hours and in the absence of adequate household labour.
While the gradual adoption of the Single Tax system
would thus profoundly change the industrial life of the
nation, it would likewise improve the family life. Slums,
as well as the present style of workmen's houses, would
disappear, and give way to decent houses and cottages,
with ample room for all the amenities and conveniences of
life. For while a private owner, aiming at the highest
rent from his plot of land, is compelled to pack it with
houses, it is a matter of indifference to the State whether
a given rent is derived from 10 or from 50 square miles.
Under the Single Tax system, cottages would be built on
land surrounding the cities, with ample grounds, and
factories would follow. The resulting withdrawal of
population from crowded cities would empty present slums
and streets, and would lower the rental-value of the land
there sufficiently to allow of cottages being built there also
on larger areas, the sole condition which would enable
them to compete with suburban garden-homes. The first
condition of a healthy family life, good homes offering
privacy to all members of the family, would thus be
secured for the whole people.
The high price of labour would make domestic service
a rare condition, and would, combined with the generally
high education and culture, lend it a new character. For
machinery would then largely take the place of domestic
hand-labour, and many domestic operations, notably cook-
ing and laundry work, would be mainly carried on as an
industrial occupation, meals being either partaken of in
restaurants or sent to the houses of consumers from such
establishments. The slavery of married women of the
2 D
402 DEMOCRACY VERSUS SOCIAUSM part v
lower, middle, and labouring class would thus be abro-
gated, to the great advantage of themselves and their
families.
The depopulation of the country districts also would
cease. For the land is used to best advantage when it is
used in small areas by independent labourers. The taxa-
tion of rent would force landowners to allow it so to be
used, and the country would then again afford ample
opportunities for a healthy, profitable, and pleasurable life.*
Not only would the exodus of the country population
to the cities be stopped, but a great return flow from
towns and cities would take place. Town life and country
life would thus lose much of their distinctive character.
Townspeople living in garden-homes, and country-people
living far more closely together than at present, would
gain physically, mentally, and morally by this change.
Socialists not infrequently have denied the efficacy
of the Single Tax system as a cure for social injustice.
While ardent claimants for Land Nationalisation, they deny
that any plan of Land Nationalisation will suffice to procure
social justice. An examination of the reasons on which
this denial is based will, however, show its erroneous
character. Mr. H. M. Hyndman, President of the Social
Democratic Federation of Great Britain, is one of these
objectors. He states : —
^ *^ In the Thames Valley ten or twelve villagers in Flackwell Heath took between
them a farm of mine of over 200 acres, at the same rent as the outgoing tenant paid.
They have had it for four years, and are working it profitably and paying their rent.
They employ more labour than the old tenant did j they pay better wages ; and one
man, during the first year of his take, grew more corn and straw on twenty acres than
was got off the whole farm the year before, when it was cultivated by a single farmer.
** The parish of Humberstone, in Lincolnshire, is part of the Carrington estate, and
consists of 2700 acres. The custom in this village has always been, that three or more
acres of land go with most of the cottages. ... In Humberstone the labourers' children
are healthy and well fed, and the labourers are industrious, steady, hardworking men,
who have for themselves solved the problem of Old Age Pensions by their own savings
from their little piece of land and cows. . . . There are no poor, and I do not know
of any one of this parish going to the workhouse or receiving outdoor relief for
years. . . .
^Another proof that allotments pay is afforded by the applications made to the
Holland County Council for small holdings. In 1892, 112 applications were made, and
every one of the applicants possessed capital ranging from j^io to ^C^^o, which they had
obtained by cultivating allotments. . . .
** What also is a most important feature is, that many of the tenants are young men
who would certainly not have been content in that district on a mere weekly wage of 12s.
or 1 5s., but would assuredly have tried their fortunes in our large towns. . . ." — ** The
Land and the Labourers," by Lord Carrington, TAe Nhuteentk Century^ March 1899.
CH. V SUFFICIENCY OF THE REFORM 403
" If agricultural rents and ground rents were taken by
the State to-morrow, the main difficulties of our great
social problem would be almost as far from solution as
ever. It needs but few figures to make this clear. Out
of the total agricultural production of Great Britain,
which is estimated to be worth, one year with another,
;^ 300,000,000, the landlords take, at the outside, little
more than one-fifth, or ^65,000,000 as rent. But as the
late Mr. Toynbee pointed out, of this ^65,000,000 not
more than ^30,000,000 would represent the * unearned
increment ' owned by individual landlords. Say the ground
rents and royalties amount to another ^60,000,000, only
one-half of this would be unearned increment either, and
it is still the fact that by mere confiscation of competition
rent the State would not get more than ^60,000,000 a
year, the rest being, in one way or another, profit on in-
vested capital, which, on this basis, it is not proposed to
touch. . . . Now, granting that this is a vast sum, which
would pay at least two-thirds of our present imperial
revenue, now levied by direct and indirect taxation — and
this is the proposal of these champions of the enforced
confiscation of competition rents — what class would be
benefited thereby ? . . . Unquestionably the capitalists,
who will be relieved of taxation to a large amount them-
selves, and who, on the taxation of the workers being
lessened, would reduce wages on the average by the
amount of such remittance." ^
The reasons, and the only reasons, which Mr. Hynd-
man thus adduces for his allegation that the adoption of
the Single Tax system would leave " the main difficulties
of our great social problem almost as far from solution as
ever," are : ( i ) That the amount of rental-values is small ;
(2) that the capitalist will be relieved of taxation ; (3) that
wages will fall pari passu with the removal of taxation from
the earnings of the working population.
The validity of the first reason turns entirely upon
a question of fact. Against Mr. Hyndman's guess of
^60,000,000 as the annual value of land in the United
Kingdom may be placed the reports of the Commissioners
^ Hyndman, TAe Historical Basis of Socialism^ pp. 300, 301.
404 DEMOCRACY VERSUS SOCIALISM part v
of Inland Revenue, as revealing the actual land-values on
which taxes are paid. The report of 1897 shows taxes to
have been paid in 1896 on annual land-values amounting
to ^202,221,944, after all improvements have been de-
ducted, a sum more than three times as large as Mr.
Hyndman's estimate.^ Nor is it astonishing to find Mr.
Hyndman's guess so wide of the mark, when he regards
royalties and ground rents as composed of improvement
values to half their amount. A further peculiarity, which
Mr. Hyndman shares with other critics, is, to disregard
the manifest consequential changes which such a profound
modification of existing social conditions as the appropria-
tion of rent by the State must entail.
It is advisable to meet here the allegation, fi-equently
made, and on no better evidence than that adduced by
Mr. Hyndman, that annual land-values are lower gener-
ally than the revenue which governments require from
taxation. The opposite is true : in all civilised countries
the annual value of land largely exceeds the revenues
raised by taxation. In the United Kingdom the imperial
and local revenues raised by taxes, duties, rates, and tolls,
amounted in 1896 to ^138,852,859,^ as against an annual
land -value of ^202,221,944, showing an excess for the
latter of over ^63,000,000. Likewise in the United States
the total national, State, and municipal revenues raised by
taxation in 1890 amounted to $828,541,000, while the
annual value of land, as far as it can be ascertained,
was $1,591,793,000, leaving an annual surplus of
$763,252,000.* The colony of Victoria, when at its
lowest ebb in 1893, shows an annual land -value of
^6,514,832, while the State and local revenues raised by
taxation, with the deficit of the year added, amounted
to ^^4,045,767, showing an excess of land-values of
^^2,469,065.* These instances, comprising countries differ-
ing widely in their state of development, show that, gener-
ally, the rental -value of land exceeds that part of the
^ See Appendix, Table I. A pamphlet iuued by the Fabian Society, Facts fir
Socialists^ p. 5, states the annual rental -value in the United Kingdom to be
1^230,000,000.
> See Appendix, Table II. ^ See Appendix, Table III.
^ See Appendix, Table IV.
CH. V SUFFICIENCY OF THE REFORM 405
common expenditure which is met from taxation, and will
be sufficient to meet this expenditure even when spurious
rent has disappeared, and apart from the consideration
that the necessary expenditure of governments will be
largely reduced under the Single Tax system.
Mr. Hyndman's second objection, that capitalists would
be relieved from taxation as capitalists, is true, but prob-
ably to a smaller extent than he supposes. In the
United Kingdom the amount which capital contributed to
the imperial and local revenues in 1896 was, as far as can
be ascertained, ^^35,752,729, while the contribution of the
working population was ^73,013,217.^
The fact that capital will be freed from taxation is not,
however, a valid objection ; on the contrary, it seems to
be one of the merits of the Single Tax system. Mr.
Hyndman has overlooked that the great capitalists are
invariably owners of monopolies, and would pay far more
in taxes on monopoly than they now pay in taxes on
capital. Moreover, the question surely arises. Does the
taxation of capital benefit the working population ? Even
if it were admitted that under existing conditions it does
not harm them — which it must do if it in any way lessens
the employment of capital — it surely cannot in any way
increase their wellbeing, as the taxation of monopoly does.
Hence, even if present conditions alone are contemplated,
the escape of capital, i.e. labour-products from taxation
cannot be urged as a valid reason against the utility of the
Single Tax system. When, however, it is recollected that
under the altered conditions which the application of this
system will create, capital will be owned largely, if not
wholly, by the workers themselves, the futility of this
objection becomes still more apparent.
Mr. Hyndman's third reason, that the removal of
taxes which fall on the earnings of labour is invariably
accompanied by a corresponding fall in their wages, is
again largely a question of fact. Between 1825 and 1861
an enormous load of taxation was removed off the
shoulders of the workers of Great Britain. Did their
wages fall during this period, or are they lower now than
1 See Appendix, Tables V. and VI.
4o6 DEMOCRACY VERSUS SOCIALISM part v
they were in 1825 ? Did the abolition of the Corn Laws,
as one example, lead to a reduction in British wages?
On the contrary, there is not a statistician or economist of
any standing who does not paint in glowing colours the
improvement in the condition of the working population
since this date, an improvement arising alike n-om an
increase in money wages and from an increase in the
purchasing power of every unit of such wages. Even
socialist economists admit these facts.^ It is, therefore,
manifest that Mr. Hyndman's third and last objection is
as erroneous as the others.
It is not denied that there are circumstances in which
a reduction of taxes which fall on wages would reduce
money wages. When production is stationary, wages tend
to fall to the subsistence level, because rent and monopoly
charges gradually encroach upon and absorb all the excess
produce. A reduction of taxes on labour would in such
conditions merely lead to an increase of rent. Advancing
production, however, necessarily increasing the demand
for labour, counteracts this tendency even under existing
conditions, and preserves the advantage more or less to
labour. The Single Tax system, however, would absolutely
destroy the tendency of wages to fall to the subsistence
level which Mr. Hyndman, in common with socialists
generally, exaggerates into an invariable fact. For as rent
becomes a common possession, any reduction in individual
wages would be compensated for by an increase in the
common possession ; and as rent rises, this common fund,
assuming more and more importance, would tend to
modify differences of condition arising from differences in
individual ability. And further, as labourers are mostly
able to employ themselves when rent is common property,
labour is more powerful in bargaining for wages than
capitalists, and wages would therefore always be at the
^ ** It will not, I think, be generally disputed that the last sixty years have seen a
very great advance in the condition of a very large part of the people" (p. l6). ** It is
unnecessary to say very much about the general rise in money wages which has taken
place since 1837. There seems no reason to doubt, so far as concerns the male workers,
the general accuracy of Sir Robert Giffen's conclusion that the rise in nearly all
trades has been from 50 to 100 per cent '* (p. 9). " I see no reason to donbt the
statistical conclusion that prices are on the whole lower than in 1837 " (p. 22). — Sidney
Webb, Labour in the Longest Reign,
CH. V SUFFICIENCY OF THE REFORM 407
highest possible level, i.e. equal to the value of each
labourer's product.^
Mr. J. A. Hobson attacks the efficiency of the Single
Tax system from other standpoints.^
" The most casual reflection upon the recent course of
English industrial history would seem to make it evident
that other classes have partaken, and more fiilly than the
landowners, in the immense growth of industrial wealth
during this century. . . . Those who regard the nationali-
sation of the land of England as a cure for all the ills
that states are heir to, ignore the leading feature of our
modern commercial policy, its internationalism. Grant
their major premises that common ownership and control
of land will procure equality of economic opportunities for
all citizens and cut away the natural supports of all
industrial monopolies, can such a consummation be attained
by us by nationalising the land of England ? Is not the
land of America, China, Egypt, Russia, and all other
countries, which by trade intercourse supply us with food
and materials of manufacture, as integral a part of England
for economic purposes as the land of Kent and Devon ?
No ultimate solution of the land question or any other
social problem is even theoretically possible upon a strictly
national basis. Neither the policy which posits * land ' as
the residual claimant in distribution, nor the policy which
assumes that political limits are coterminous with economic
limits, can gain any wide and permanent acceptance among
thoughtful people."
The first of these arguments, viz. that other classes
have partaken even more than landowners of the immense
growth of wealth, even if its truth were admitted, would
furnish no valid objection to the Single Tax system. For
the theory on which this system is based does not postulate
that the acquisition of wealth by any individual or class
other than landowners is impossible under the existing
system ; nor does it assert that the acquisition of wealth
by any individual or class is socially injurious. What it
^ See Part II. chap. x.
2 J. A. Hobson, "The Inflaeoce of Henry George in England," Fortnightly Review^
December 1897.
4o8 DEMOCRACY VERSUS SOCIAUSM part v
posits is, that the acquisition of wealth without equivalent
service rendered by those who acquire it is alike unjust
and socially injurious. If Mr. Hobson were to contend,
which he does not, that other classes than landowners,
monopolisers of land for special uses, and owners of tax
monopolies have gained wealth without rendering equivalent
service, his objection would have point. Even if this could
be shown, as it might be shown of gamblers at the stock
exchanges, the question would still arise whether such
gambling in monopoly -values would be possible when
monopoly-values have ceased to exist. As in this case, so
in all cases, the abolition of legalised private monopoly
must destroy not only the power of all such landowners,
but the power of all others as well to legally obtain wealth
in excess of services rendered by them.
The second objection, admitting that the Single Tax
system if generally adopted would secure equal opportunities
for all, denies that its adoption in England alone would
secure equal opportunities to all the inhabitants of
England ; and posits that, owing to the world-wide
interchange of commodities, the Single Tax system must
be adopted in all countries before it can secure equal
opportunities to the inhabitants of any country. This
argument is of precisely the same character as that which
denied the feasibility of the adoption of Free Trade by the
United Kingdom as long as other countries refused to do
so. It arises from the exaggeration of a well-established
fact. Trade benefits both parties to it, and the larger
the trade the greater the resulting benefit of each. As
long as any country maintains laws which diminish its
trade, it must not only reduce the prosperity of its own
people, but the prosperity of others as well, though to a
smaller extent. Nor does it matter whether this diminu-
tion of interchange arises from laws directly framed for
this purpose, or whether it arises from laws which indirectly
achieve this result by reducing production and consumption.
The application of the Single Tax doctrine, of the Free
Trade doctrine, or of any other beneficial economic legis-
lation in any one country therefore produces smaller
results than if it were applied in all countries. But to
CH. V SUFFICIENCY OF THE REFORM 409
infer from this truth that the application of just and
beneficent laws in a single country cannot produce any
results, or even that it cannot produce great results,
is to fall by exaggeration into untruth. If the
general application of the Single Tax system would
produce equality of opportunity for all men, its application
in England must produce equality of opportunity as far
as all Englishmen are concerned. Every inhabitant of
England will be free to produce all the wealth his powers
enable him to make, and will himself enjoy the whole of
it. Likewise will he enjoy untaxed any products of
foreign labour which he may purchase with the products
of his own labour. If the foreigners with whom he trades
refuse to adopt the Single Tax system, their land will
continue to be insufficiently used, they will produce less
wealth, and the mass of their people will consume far less
wealth than they otherwise would. They therefore will
have less power to purchase English goods, and if they
have a natural monopoly in the production of any goods
which Englishmen want, the latter will be obliged to give
more of their own goods to obtain them. The refusal of
other nations to adopt the Single Tax system will harm
Englishmen to this extent, and to this extent only. But
they have now to purchase such monopoly-goods at prices
similarly enhanced by this cause, and in several instances
further inflated by English customs duties ; and most of
them have to do this while themselves receiving only
a part of the produce of their labour. To give them the
full produce of their labour, therefore, is a benefit to all
Englishmen, even if other nations refuse to do the like
to their members. If they do likewise, the benefit to
Englishmen will be greater still. But in no way can it be
shown that the refusal of other nations to do the like act
of justice will deprive Englishmen of all or even of a
major part of this benefit.
It may, however, be held that Mr. Hobson's objection
looks for its justification in another direction, that he is of
opinion that largely increased wages would so far reduce
the competitive power of English industry as to lead to
the exclusion of English goods from foreign markets.
4IO DEMOCRACY VERSUS SOCIALISM party
This, however, cannot be the case. For Mr. Hobson has
shown elsewhere with great lucidity that he agrees with
the teaching of nearly all modem students of political
economy, with F. A. Walker, Gunton, Schoenhof, Gould,
Atkinson, Brentano, Schultze-Gaevernitz, and others too
numerous to mention, that high wages tend to produce
other results ; that they increase the consumptive power
of a people so largely as to reduce exports to the limit of
necessary imports without injury to local industry ; that
they stimulate the productive power of a nation, the
efficiency of labour and capital, to an extent which excludes
all fear of loss of competitive power.
He states : —
"Our evidence leads to the conclusion that while a
rise of wages is nearly always attended by a rise of
efficiency of labour and of the product, the proportion
which the increased productivity will bear to the rise of
wages will differ in every employment. . . . Every rise
in wages, leisure, and in general standard of comfort will
increase the efficiency of labour ; every increased efficiency,
whether due directly to these or to other causes, will enable
higher wages to be paid and shorter hours to be worked." ^
" Though the individual self-interest of the producer
cannot be relied upon to favour progressive wages, except
in certain industries and up to a certain point, the col-
lective interest of consumers lends stronger support to
* the economy of high wages.* We have seen that the
possession of an excessive * power to consume ' by classes
who, because their normal healthy wants are already fully
satisfied, refuse to exert this power, and insist upon stor-
ing it in unneeded forms of capital, is directly responsible
for the slack employment of capital and labour. If the
operation of industrial forces throws an increased propor-
tion of the * power to consume ' into the hands of the
working classes, who will use it, not to postpone consump-
tion, but to raise their standard of material and intellectual
comfort, a fuller and more regular employment of labour
and capital must follow. If the stronger organisation of
labour is able to raise wages, and the higher wages arc
y J. A. Hobson, TAt Evolution of Modem Caftitalim, pp. 274, 275.
cH.v SUFFICIENCY OF THE REFORM 411
used to demand more and better articles of consumption,
a direct stimulus to the efficiency of capital and labour is
thus applied. . . . When it is clearly grasped that a
demand for commodities is the only demand for the use
of labour and of capital, and not merely determines in
what direction these requisites of production, shall be
applied, the hope of the future of our industry is seen to
rest largely upon the confident belief that the working
classes will use their higher wages, not to draw interest
from investments (a self-destructive policy), but to raise
their standard of life by the current satisfaction of all
those wholesome desires of body and mind which lie
latent under an * economy of low wages.* *' ^
Whichever, therefore, is the meaning of the somewhat
enigmatical utterance under review, it is manifest that it
forms no valid objection to the Single Tax system ; that
whether the latter is applied in a single country or in
many countries simultaneously, its resmts must be great
and beneficial.
The writers of the Fabian Essays also raise one, and only
one, objection to the efficiency of the Single Tax system
as a remedy for social injustice and the resulting evils.^
"Ever since Mr. Henry George's book reached
English radicals there has been a growing disposition to
impose a tax of twenty shillings in the pound on obviously
unearned incomes — that is, to dump four hundred and
fifty millions a year down on the exchequer counter, and
then retire with three cheers for the restoration of the
land to the people.
** The result of such a proceeding, if it actually came
ofF, would considerably take its advocates aback. The
streets would presently be filled with starving workers of
all grades, domestic servants, coachbuilders, decorators,
jewellers, lace-makers, fashionable professional men, and
numberless others whose livelihood is at present gained
by ministering to the wants of these and of the pro-
prietary class. . . . The Chancellor of the Exchequer
would have three courses open to him : —
^ J. A. Hobson, The E'uolutim of Modem Capitalism^ pp. 282, 283.
' Fabian Essay s, pp. 189, 190.
412 DEMOCRACY VERSUS SOCIAUSM partv
(i) "He could give the money back ^ain to the
landlords and capitalists with an apology.
(2) " He could attempt to start State industries with
it for the employment of the people.
(3) '* Or he could simply distribute it among the un-
employed.
" The last is not to be thought of ; anything is better
than panem et circenses. The second (starting State in-
dustries) would be far too vast an undertaking to get on
foot soon enough to meet the urgent difficulty. The first
(the return with an apology) would be a reducHo ad
absurdum of the whole affair — a confession that the private
proprietor, for all his idleness and his voracity, is indeed
performing an indispensable economic function, the
function of capitalising, however wastefully and viciously,
the wealth which surpasses his necessarily limited power
of immediate personal consumption. And here we have
checkmate of Henry Georgeism, or State appropriation of
rent without Socialism."
This objection, though, or perhaps because, coming
from the most intellectual champions of Socialism, is the
weakest of all. For it is obviously based on the errone-
ous assumption that a gradual absorption of rent is im-
possible, that the whole of it must be appropriated by one
sudden act. Its invalidity, therefore, is manifest as soon
as it is realised that the process can be gradual ; that
starting with a moderate tax on all land-values, this tax
may be increased from time to time, till, after the lapse of
a considerable period, it absorbs the whole rental-value.
For under such conditions the disorganisation of industry,
so graphically described by the essayist, could not occur.
The demand of the working population for goods would
grow at a greater rate than the demand of the monopo-
listic classes for goods and services would decline, and
more labour, therefore, would be absorbed in the former
direction than could be spared in the latter. The new
and greater demand would, it is true, be for a different
quality of goods ; but those who are skilful enough to
produce the superior qualities would also be able to pro-
duce inferior qualities of the same goods ; and in any
cH.v SUFFICIENCY OF THE REFORM 413
case, the change in demand would arise so gradually as to
enable even changes of occupation to be made without
any great hardship.
Moreover, this latter difficulty, necessary change of
occupation, adheres to Socialism as much, and perhaps
more, than to Single Tax. For Socialism also posits the
gradual reduction of the wealth of the capitalistic classes
and the gradual increase in the wealth of the workers.
It, therefore, necessitates a like adaptation of production
to these altered conditions. If this necessity is a valid
argument against the efficiency of the Single Tax system,
it is, therefore, an equally valid argument against the
efficiency of Socialism. It is, however, invalid in either
case. All social changes, even the most beneficial, must
produce some temporary disturbance of existing arrange-
ments. Such disturbance, therefore, is no valid argument
against reforms which produce permanent benefits. All
that may be claimed is, that the reform be introduced so
gradually as to minimise temporary hardship. This the
Single Tax system does to an extent which makes any
such temporary hardship almost impossible.
CHAPTER VI
MR. EDWARD ATKINSON*S OBJECTIONS
The objections urged against the Single Tax doctrine by
two eminent economists ^ are worthy of consideration and
examination. One of these is Mr. Edward Atkinson,
whose numerous objections,* embodied in the following
extracts, must be considered seriatim : —
" The Single Tax, whatever its amount may be and at
whatever point it may first be collected, can be but the
taking of a part of the joint product of land, labour, and
capitd, by due process of law, from the people who do
the actual work by which men subsist ; such products
thus taken from producers being applied to the consump-
tion of those who do the necessary, but not directly pro-
ductive, work of the Government."
A tax on the value of land is a tax on rent. Rent is
not received by any capitalist or labourer, but by the
owner of the land. Even if the same person is capitaUst,
labourer, and landowner, he still receives the rent, not on
account of the expenditure of capital or labour on the
land, but by virtue of being the owner. He would
receive rent just the same if he were neither capitalist
nor labourer. Is the landowner, as landowner, one of
" the people who do the actual work by which men sub-
sist " ? His only work as a landowner consists in the
reception of rent. Is this part of the " actual work, etc." ?
^ Precedence would have been given to the arguments urged against the justice and
expediency of the Single Tax system by Herbert Spencer in yustia, but for the fact that
Henry George has so fully refuted them, alas ! not without excusable bitterness, in A
Per^exed PAiiesopAer, that further refutation is as impossible as unnecessary.
^ ** A Single Tax upon Land," TAe Century Magaxitu, July 1890.
cH.vi EDWARD ATKINSON'S OBJECTIONS 415
If this question is answered in the negative, as it must be
answered, it is admitted that the Single Tax does not take
anything from those ** who do the actual work by which
men subsist," but merely takes, for the common benefit,
common property now absorbed by parasites on produc-
tion. Mr. Atkinson is, probably, the only economist of
any standing, living or dead, who has asserted, or would
dare to assert, that rent is the reward for productive ser-
vices rendered by the landowner. Such authorities as
Adam Smith, John Stuart Mill, Cairns, Walker, and
Marshall, as well as innumerable others, emphatically
assert the opposite. . . .
" Since such a tax must necessarily be the first lien
upon the land, and must be paid year by year, even in
advance of its cultivation or its use, for business purposes
or dwellings ; and since the payment of this tax in money
would of necessity become the sole condition on which
the possession or use of land for any purpose could be
granted by the State, it might happen that the burden
would become too great to be undertaken, except by
persons who already possess ample capital from which
they could advance the taxes in anticipation of recovering
them from the product of the land or from the income of
their buildings.
" Could the poor farmer, the mechanic, or the artisan
of moderate means, or, in fact, could any who did not
possess ample capital, afford to accept the conditional
possession of land under such terms ? Each one who
now occupies land can answer this question for himself by
multiplying the present tax upon his land by five or at
least by four."
In making this objection Mr. Atkinson seems to have
overlooked several obvious and important facts. The first
of these is, that poor farmers, mechanics, and artisans of
moderate means are not owners of very valuable land, and
that if they want to occupy valuable land now, they have
to pay a higher rent for the same than the tax would
amount to on the full establishment of the Single Tax
system. The second fact is, that in addition to a rent
higher than the Single Tax, these poor farmers, artisans, and
41 6 DEMOCRACY VERSUS SOCIAUSM party
mechanics have now to pay taxes and charges of which the
Single Tax system would relieve them absolutely, and which
— certainly in the case of American farmers, mechanics,
and artisans — ^largely exceed the annual value of the land
which they occupy. The third fact is, that the Single Tax
system, by compelling the full use of all valuable land,
would largely increase wages. Inasmuch, therefore, as the
Single Tax payable by the classes mentioned would be less,
and considerably less, than one-half of the burdens which
they now bear when using land, while at the same time
their power to bear burdens, their wages, would be largely
increased, it follows that the Single Tax, instead of reducing
the power of poor persons to use land, as Mr. Atkinson
asserts, would largely augment that power, enabling them
to use land now far beyond their reach.
Like results would obviously ensue in those cases in
which poor farmers, mechanics, and artisans nominally own
properties which are heavily mortgaged. They pay interest
and taxes, whereas under the Single Tax system they would
be able to occupy land of like value while paying no interest
on purchase - money , and a single tax frequently less in
amount than they now pay in the multitudinous taxes to
which they are subjected.
It may, however, be that Mr. Atkinson, when he made
this sweeping assertion, had in his mind only that small
minority of poor persons who own, free of mortgage, the
land which they occupy. Such persons, under the Single
Tax system, would have to pay a tax equal to the then
rental-value of the land, and would only save the amount
which they now pay in taxation. Where such taxation is
higher than the rental-value of their land, they will be in a
better position to occupy land. Where present taxation
is less — a rare case — they will still be in a better position,
on account of the increase in their wages.
Mr. Atkinson's apprehension, however, becomes some-
what ludicrous when the value of land usually occupied
by such poor persons as he enumerates is considered. A
mechanic or artisan does not generally occupy more land
than suffices to support his cottage. Nor is his domicile
usually to be found in those quarters of great cities where
CH.vi EDWARD ATKINSON'S OBJECTIONS 417
land-values are high. From ^60 to ^100 is usually the
value of all the land occupied by cottages of which artisans
and mechanics acquire the freehold. Even if rent is cal-
culated at the high rate of interest of 5 per cent, such men
would be burdened with annual payments in substitution
for, not in addition to, present taxation of from ^3 to ^5.
The freehold farmers of the United States own farms
of an average value of $2000, inclusive of improvements.^
As the latter in new countries bear a larger proportion to
land-values than is the case in other classes of real pro-
perty, $1000 may be safely taken to be the average land-
value of American farms. The annual tax payable under
the Single Tax system by American farmers, therefore,
would, at 5 per cent, amount to $50 or ^10, or less.
This sum they would pay, not in addition, but in sub-
stitution for existing taxes and undue railway charges.
Every one of them also would thus find his burdens largely
reduced by the Single Tax system, instead of their being
increased as Mr. Atkinson asserts.
Finally, Mr. Atkinson assumes that the Single Tax must
always be paid in advance of occupation and cultivation.
There is nothing to warrant this assumption. Local
authorities assessing and collecting the tax will naturally
cause it to be payable at a time which embarrasses their
constituents least. Any one entering upon the occupation
of waste land — of land surrendered by a former occupier —
or taking over land under agreement with its occupier,
will, if the land have value, pay the tax on the date fixed
by law. This may be the day after he entered upon the
land or twelve months later, according to the date of such
entrance. To exact the rent in advance, which under Land
Nationalisation may be necessary, is not only unnecessary
under the Single Tax system, but is foreign to its spirit, and
impracticable under the regulations which the application
of the system imposes. Mr. Atkinson's apprehension,
therefore, is groundless. The Single Tax system, instead
of making it more difficult for poor men to occupy and
use valuable land, will render it infinitely easier and more
profitable for them to do so.
^ Report of Bureau of Labour Statistics oflllinoisy 1894, rabject, ** Taxation," p* 131.
2 £
41 8 DEMOCRACY VERSUS SOCIALISM partv
" If this theory of a single tax on land were carried
into effect it would probably load all desirable lots of land,
either in city or in country, with such permanent burdens
that none but large capitalists could thereafter afford to
occupy them for any purpose whatever. The owners of
capital would not then be obliged to pay any principal
sum or capital for the purchase of land. They would,
therefore, retain the whole of their large capital for its
improvement, and they would thereafter secure as large an
income from their capital only as they now derive from
the rent of the land which they now purchase and capital
combined.'*
In refuting the previously cited objection it has been
shown that the Single Tax makes it easier for poor men to
occupy and use land. The present objection relates to
land of great value, and first expresses a fear that such
land will be "loaded with such permanent burdens that
none but large capitalists could afford to occupy them."
How can the Single Tax add to the burdens of intending
occupiers of very valuable land ? Take a piece of land
of a value of ^50,000. Under existing conditions the
intending occupier may either purchase or rent it. If he
does the former, the occupancy and use of the land is
burdened with an annual interest charge, which, at 5 per
cent, amounts to ^2500. If he rents the land on long
lease his use and occupancy may be burdened with more,
and will certainly be burdened with this same amount as
rent. In addition, his use and occupancy is in either case
burdened with taxes on capital or income, or both. Under
the Single Tax system, other conditions being equal, he will
be burdened with a smaller rent charge, say ^2000, and
with no taxes on capital or income. Obviously, therefore,
whatever the value of the land may be, the Single Tax
system must reduce, and cannot increase, " the permanent
burdens "on its use and occupancy. Smaller capitalists,
therefore, than can now afford to do so would be enabled
to use land of great value.
The second objection is, that owners of capital, instead
of paying part 01 it for land, would devote all of it to
improvements, thus reaping as large an income as now.
cH.vi EDWARD ATKINSON'S OBJECTIONS 419
If this objection were urged by a socialist working man,
ignorant of the rudiments of political economy, it might
create no astonishment. But when it is seriously advanced
by one of the foremost economists of the United States,
innocent of socialistic tendencies, it shows the straits to
which the opponents of the Single Tax theory are put.
For it is obvious that incomes derived from the ownership
of land and from the ownership of improvements differ
widely in their economic and ethical character. The
former is not a reward for services rendered, but a tribute ;
it is deducted from the product of the national labour,
without the recipient having rendered any assistance to
this labour. The latter income is a reward for services
rendered ; it is a deduction from the product of the
national labour, generally less, and never more, than the
value of the assistance rendered to this labour.
Moreover, imder existing conditions capitalists do not
always devote any great part of their capital to the creation
of improvements. In progressive communities they run
less risk by devoting nearly all of it to the purchase of
land. By keeping this land idle, they, if their speculation
is successful, obtain an equivalent to income through the
rise in the rental-value or land due to the progress of the
community, while avoiding the trouble and risk of seeking
investments for surplus income. This action, keeping land
out of use, even more detrimental to the general wellbeing
than their appropriation of rent, may and frequently gives
them a larger income than capitalists could obtain under
the Single Tax system, who, with equal success in their
speculation, had used a like amount of capital in creating
improvements. The income obtained by capitalists who
purchase land, therefore, is, either in part or wholly, detri-
mental to the community; the income which capitalists
obtain under the Single Tax system is wholly beneficial to
the community.
The following two objections, separated in the essay
by other matter, are here brought into juxtaposition in
order to show their utterly contradictory character : —
" It matters not where the tax is first imposed — ^whether
by a single tax on land or by multifarious taxes on other
420 DEMOCRACY VERSUS SOCIALISM part v
objects — this work will be distributed as a part of the cost
of the national product, either on the whole or on the
special products subject to taxation. Under the Single Tax
system the tax would be distributed substantially in pro-
portion to the consumption of all products of every kind
by the people of every class. Taxes will not stay where
they are put ; if they would, the tax question would be
solved with very little difficulty."
" Now let it be admitted that a way can be conceived
for determining the relative value of every parcel of land
in the United States . . . and that a tax of 5 per cent
upon that land would yield a revenue sufficient to defray
the entire expenses of the Government ; in such event
substantially all rent of any kind would be absorbed by
the tax. What would next ensue ? . . . The moment
land ceased to yield an income or rent to the owner no one
would pay him anything for it. The market value of land
would no longer exist."
If the Single Tax " will not stay where it is put " ; if it
" would be distributed " among consumers " substantially
in accordance with the consumption of products," it could
not lessen the incomes of landowners. Land could not
then "cease to yield an income or rent to the owner."
If, on the other hand, the imposition of the Single Tax on
land does deprive the owners of land of all income or rent,
it is obvious that they pay the tax ; that the tax does
"stay where it is put," and cannot be "distributed"
among the consumers. Yet Mr. Atkinson asserts that
both these mutually exclusive results must be expected.
" It requires but little observation to prove that neither
the area of land nor the value of land as now computed
bears any positive or equal proportion to the product. In
the production of the crude materials which are converted
into food, or the crude fibres which are converted into
clothing, a very large area of land is required both in ratio
to the quantity and the value of the crude product. .
" With respect, for instance, to wheat, the area of land
which must be devoted to its product in a crude form —
i.e. as grain — is very great in proportion to the area of land
which must be occupied by either the railway, the miller,
cH.vi EDWARD ATKINSON'S OBJECTIONS 421
or the baker, or the dealer who distributes the bread ; yet
the value which is added to the wheat by the work of the
railway, the miller, the baker, and the tradesman who dis-
tributes the bread is about two to one as compared with
the value at the farm of the crude product of the wheat of
which the bread is made. If land only is taxed, the farmer
must pay the larger part of the tax or recover it from
consumers in the best way he can devise. If he cannot
recover it he must stop work."
Though in the first sentence of the above quotation it
is insinuated that the subsequent argument will take into
account the value of land, no further notice is taken of it,
and the conclusion is reached that " farmers must pay the
larger part of the tax " because they use " a greater area
of land " than subsequent manipulators of crude products.
Two facts are overlooked : First, that farmers generally
pay rent or interest on mortgage and taxes as well, whereas
under the Single Tax system they would pay rent alone,
and a smaller rent, in the form of a tax. The second is,
that though the area of land used by farmers is larger than
that used by railways, millers, bakers, and distributers of
bread, the value of land used by farmers is not necessarily
greater than that used by other classes of the population.
As the Single Tax is to be imposed in accordance with
value and not in accordance with area, the statement that
" the farmer must pay the larger part of the tax " could
only be true if farming land was more valuable than all
the other land of a country. This is a question of fact,
and the facts prove that the value of agricultural land
everywhere bears but a comparatively small proportion to
the value of all land. In the United Kingdom the annual
value of all agricultural land, apart from improvements, is
about ^42,000,000, or 20 per cent of the total annual
value of land.^ Instead of paying the greater part of the
Single Tax, agricultural land would, therefore, pay only the
fifth part of it.
In the colony of Victoria, agricultural land, inclusive
of the land of country towns and hamlets, has a capital
value of ^57,324,405 * as compared with a total land
^ See Appendix, Table I. ' Return of GoYemment Statitt, 1893.
422 DEMOCRACY VERSUS SOCIALISM part v
value of ;^i45,569,cx)0.^ The value of agricultural land
may, therefore, safely be placed at less than 35 per cent of
that of all the land privately owned. Such land would,
therefore, pay less than 3 5 per cent of the Single Tax, even
in this pre-eminently ^ricultural and pastoral community,
instead of its larger part.
In the United States the census of 1890 returns the
aggregate real value of farms (in round numbers) at
$13,729,000,000 out of a total taxable real estate value
of $46,000,000,000.* The value of farming land would
thus appear to be just under 30 per cent of all land-values,
and the contribution of farming land to the Single Tax
would also be less than 30 per cent instead of " the larger
part." It is, however, more than probable that, owing to
undervaluation of city properties, the proportionate con-
tribution of farmers has been overstated.
The further assertion, contained in the last sentence of
the preceding quotation, that the farmer must stop work
unless he can recover the Single Tax, ^ain overlooks the
fact that it will be imposed in substitution and not in
addition to all the taxes and excessive railway charges
which unencumbered freehold farmers now pay ; and that
more than one half the farmers of the United States,
being either tenants or burdened with mortgages,' are now
paying more than the Single Tax in addition to all other
taxes and charges. All the farmers, and especially Ae
latter class, would, therefore, reap much larger incomes
under the Single Tax system than they do now, though
they cannot shift the tax. As they have not stopped
work under existing conditions, it is not to be apprehended
that they will do so when their work is so much more
profitable.
" If land should be taxed at its * site ' value, without
regard to the capital or value of the buildings or improve-
ments upon it, then the poor man who may now be in
possession of a small house must pay as much as the
rich man who owns a large house in the next lot of
the same site -value, or an expensive warehouse in the
^ See Appendix, Table IV. > Sheannan, Natural Taxattoa^ p. 184.
CH. VI EDWARD ATKINSON'S OBJECTIONS 423
immediate neighbourhood on another lot of the same site-
value."
Where poor men own a small house next door to a
rich man's large house, the respective site-values of the land
on which these houses stand cannot possibly be the same.
It may be so foot for foot, but inasmuch as the large
house necessarily occupies a greater area than the small
house, its site- value, and the Single Tax which the owner
must pay, must be greater than that of the small house
and of the tax which its owner must pay. Moreover, in
the rare cases in which land is occupied by rich men's
houses in working men's quarters, the rich man's house is
generally surrounded by grounds, while the poor man's
house is not. The rich man, even in these exceptional
cases, would, therefore, pay far more than his poor neigh-
bours. As a general nde, however, rich men's houses are
built on land which foot per foot is far more valuable
than that of which poor men possess the freehold. And
further, while the land on which his cottage stands is all
the land and all the monopoly-right owned by the poor
man, the rich man generally owns other land and mono-
poly-rights besides the land on which his house stands.
While the contribution of this poor man to the Single Tax,
therefore, will be insignificant, that of the rich man will
be large.
"Their (the single taxers') m^n object would be
attuned if land should cease to have any saleable or
market value, as the result of the Single Tax imposed upon
it. Yet the necessity is admitted by them that land should
be placed in the possession of private persons in order that
labour and capital may be applied to its use and occupancy
for purposes of production and distribution. . . . Would
it not become necessary for assessors to be appointed by
the national government to establish what the Single Tax
system calls the * site ' value of land ? How would these
assessors determine the exact or full amount which any
person could afford to pay for the choice of land or for
the selection of a particular site in order either to cultivate
or to occupy it ?
" How could this * site ' value be established without
424 DEMOCRACY VERSUS SOCIALISM part v
practically leasing the land at specific or fixed rates of
annual taxation, established so as to cover long periods of
time ? Without such permanent possession at a fixed rate
who would expend capital upon land ? "
This, the last quotation from Mr. Atkinson's essay,
embraces two objections : one, that it is practically im-
possible to determine the value of land for purposes of
taxation under the Single Tax system ; the other, that no
one would expend capital on land unless the land were
leased for long periods at a uniform rental or tax.
As to the first of these objections, the annual value of
land is determined by competition, and will be so deter-
mined under the Single Tax system. The rent payable for
houses in a given street will vary with the demand. If a
given house, which has a building value of ^icxx), returns
a rent of ^loo one year and of ^120 the next year, the
local assessors know that the rental-value of the * site * and
not of the house has increased. It is not the assessors
who assess the site-value, but the public demand for the
site. No difficulties, therefore, can be encountered in
assessing this value.
As to the second objection, it is true that few persons
are foolish enough to expend a large amount of capital in
improvements on land belonging to private persons unless
they have a long lease of the land. The reason is, that
the owner of the land, in the absence of a lease, would be
free to confiscate the capital expended or force the tenant
to pay rent for improvements made at his own expense.
Both these methods of oppression have been and still are
prevalent ; both would be impossible under the Single Tax
system. The value on which the tax is assessed could not
be raised or lowered arbitrarily ; improvement values could
not be included in the assessment ; and as long as the tax
is paid neither the present holder nor his assignees could
be deprived of possession. The occupiers' security, being
practically a perpetual lease at a variable rent, judicially
fixed, would be better than the longest lease granted by a
private owner. Therefore no one would hesitate to expend
capital in improvements imder the Single Tax system on the
ground that he had not a lease for a number of years.
cH.vi EDWARD ATKINSON'S OBJECTIONS 425
That which Mr. Atkinson pronounces impossible
is actually being done. In the Chinese possession of
Germany the Single Tax system has been adopted. Land
is taxed at the rate of 6 per cent on its capital-value, im-
provements are exempted and no other tax is levied. Re-
assessment takes place every three years. Yet merchants
and others have erected and are now erecting buildings
and other improvements — ^are expending large amounts of
capital on land, under conditions of which Mr. Atkinson
asserts that they would make such action impossible.
CHAPTER VII
PROFESSOR FRANCIS A. WALICER*S OBJECTIONS
Far more searching than the attacks of Mr. Atkinson
are those made upon the Single Tax system by Professor
Francis A. Walker, one of the most distinguished of
American economists. These attacks are mainly contained
in a small volume, Land and its Renty professedly published
to refute Henry George's doctrines as set out in Progress
and Poverty. Professor Walker, however, simplifies his
task very materially. As will presently be shown, he does
not deny the injurious influence of private property in land
on the distribution of wealth ; he admits the injustice of
landowners appropriating rent without rendering service
in return. All he claims is that George has exaggerated
the influence of rent on the distribution of wealth ; that
the injustice involved in private ownership of land is more
than compensated for by the advantages which it confers
upon the community ; and that by refuting the allied
exaggerations he has refuted the validity of the claim
that the interests of society urgently demand the appro-
priation for common purposes of the rent of land.
The points in George's arguments to which Pro-
fessor Walker addresses himself, and his manner of
dealing with them, will be considered seriatimy and are as
follows : —
" Let us take up, in their inverse order, Mr. George*s
three capital propositions. And first, how much is there
in the view that commercial disturbance and industrial
depression are due chiefly to the speculative holding of
land. That land in its own degree shares with other
CH. VII PROFESSOR WALKER'S OBJECTIONS 427
species of property in the speculative impulses of exchange,
is a matter of course. Everybody knows it ; no one ever
thought of denying it. Mr. George makes no point
against private property in land unless he can show that
it is, of all species of property, peculiarly the subject of
speculative impulses. Now this is so far from being self-
evident or established by adequate induction that the
contrary is the general opinion of economic writers. Of
all species of property, land, especially agricultural land,
starts latest and stops earliest in any upward movement of
prices, as induced, for instance, by a paper-money inflation,
which perhaps aflFords the best opportunity for the study
of purely speculative impulses.
" Of course, there are circumstances under which those
impulses may especially attack land, and a wild * rig ' may
be run in the market for this commodity, as, at other
times, in the market for government stocks, mines or
railways, or Dutch tulips." ^
Is it true that " Mr. George makes no point against
private property in land, unless he can show that it is, of
all species of property, peculiarly the subject of speculative
impulses".? Suppose it were not, is it not possible that
whereas speculation in labour-products might inflict little
or no harm on the community, speculation in land might
inflict infinite harm, though land were no more subject to
speculative impulses than labour-products ? This, as a
matter of fact, is George's position and also that of
common sense. Speculation in wheat, for instance, holding
it at the end of a good harvest, in the expectation that the
next harvest may prove less plentiftil, may be cited as an
example of speculation in labour-products which, by pre-
serving a part of present superfluity to meet subsequent
scarcity, is beneficial to the community. Nor can it be
shown that, in the absence of monopoly, any speculator in
labour-products can benefit himself without conferring at
least an equivalent benefit upon the community. On the
other hand, no benefit, but only injury to the community,
can arise from speculation in land, whether it is specula-
tion which keeps land out of use, or which " rigs " the
^ Land and its Rentj pp. 162, 163.
428 DEMOCRACY VERSUS SOCIALISM party
land market in other ways to the temporary increase of
land prices and rent.
While Mr. Walker thus misconceives the problem
presented to him, he similarly misunderstands the question
which he himself puts, i.e. whether land is peculiarly the
subject of speculative impulses. For obviously this is
not merely a question of agricultural land, to which he
confines it, but of all land. Which are the main objects
of speculation at Stock Exchanges ? R^ways, tramways,
mines, gas and water shares and similar securities, based
on the ownership of land or special privileges to land,
easily come first. Moreover, any inflation, whether it be
a paper-money inflation, or any large addition to capital
seeking investment, results first and foremost in the
speculative rise of urban properties. Wild speculation
in such lands, periodically recurring, can be recalled by
any man who has passed middle age in any progressive
country where free trade in such land exists. By far the
greater part of land -values, therefore, are not merely
" peculiarly the subject of speculative impulses," but arc
pre-eminently the object of speculative transactions and
excesses.
The peculiarity, here apparent, of regarding agricultural
rent as the only rent, adheres to Mr. Walker's argumenta-
tion throughout. As is seen in the foregoing quotation,
he even overlooks the obvious fact that mines are as much
land as farms, i.e. apart from improvements, and disregards
urban rents altogether. Yet, inasmuch as the value of
agricultural land represents only a small part of all land-
values, this treatment of the subject must necessarily lead
to erroneous conclusions.
" We now come to Mr. George's second count. The
allegation that the enhancement of the value of land, above
what should be regarded as the capitalised value of its
present productive or income-yielding power, withdraws
large bodies of land from cultivation, thus driving labour
and capital to poorer and more distant soils, in order to
secure the needed subsistence of the community, can only
be characterised, so far as all the agricultural uses of land
are concerned, as a baseless assumption, for which not a
cH.vii PROFESSOR WALKER'S OBJECTIONS 429
particle of proper statistical proof can be adduced, and
which is directly contrary to the reason of the case.
" Because, forsooth, a man is holding a tract of land
in the hope of a rise in its value years hence, does that con-
stitute any reason why he should refuse to rent it, this
year or next, and get from it what he can, were it not
more than enough to pay his taxes and a part of the
interest of the money borrowed, to * carry' the pro-
perty ? " '
In a footnote to page 165, Mr. Walker says further :
" It will be observed that in the extracts quoted it is culti-
vation which is spoken of." Yet, strange to say, while
drawing the attention of his readers to this fact, he himself
has forgotten it. For all his argument is directed to show
that the speculative holders of agricultural land would
sooner let it for a small amount than keep it idle. Yet
that is not the problem. It is whether these holders will
invariably let the land for cultivation, instead of letting it,
or themselves using it, for inferior purposes, say the
grazing of sheep or cattle. For if valuable land, fit for
cultivation and near to markets, is largely used for this
inferior purpose, then the consequence urged by George
and which Mr. Walker endeavours to disprove must
follow ; labour and capital must be driven to the cultiva-
tion of poorer and more distant soils.
Is the existence of these conditions "a baseless
assumption " " directly contrary to the reason of the
case " ? Every new and progressive country exhibits
them. The most fertile and one of the best watered
provinces of the colony of Victoria is known as "the
Western District." It runs along the coast from the
Port of Geelong, past those of Warrnambool and Port
Fairy, to that of Portland. Two railway lines traverse
it from end to end. Land there, though very little
improved, averages over ^10 per acre in value, and con-
siderable tracts have changed hands at from ^25 to ^40
per acre. Yet this land, held in large areas, and other
land like it, have been used almost solely for grazing pur-
poses, while intending farmers were compelled to traverse
^ Land and its Rtnt^ pp. 164, 165.
430 DEMOCRACY VERSUS SOCIAUSM part v
its length in their search for land. They found it in
what are known as the Wimmera and Mallee provinces,
where a scanty rainfall slightly moistens land of poor
quality, and so distant from markets and ports that cart-
age and railway charges consume nearly all the profit
which the farmers' labour can wring from the ungratcfiil
soil. Land here, though far more highly improved than
that of the Western District, has a value of from los. to
^3 per acre. Is not in this instance labour and capital
driven to poor and distant lands, because the owners of
the nearer and far more fertile land refuse permission
for its cultivation ? Yet the rent which farmers would be
willing to pay, and in some exceptional instances do pay,
for this land, largely exceeds the return which it yields as
grazing land.
Nor is this condition peculiar to this district or to
Victoria. It prevails in all the Australian colonies, except
where the imposition of taxation upon the value of land
has, as in New South Wales and still more in New
Zealand, forced the owners of valuable grazing properties
to let or sell the most valuable of them for superior
uses.
Nor is this all. In the business quarter of every city
hovels may be seen by the side of palaces. The owners
will not improve or cannot afford to improve their hold-
ings to the extent which business requires. As a con-
sequence traders are forced to take premises farther away
from the centres of trade. The margin of production being
thus lowered, rent is increased as much as by the lowering
of the agricultural margin.
In new countries many building lots within the limits
of towns and cities are kept idle, frequently in the most
desirable situations, enforcing an extension of the city
limits and a further increase of rent.
Around all cities, much land, fit for the intensest
culture, is kept idle for speculative purposes. Users will
only take it on long leases, owing to the valuable improve-
ments which intense culture demands. Owners refuse to
grant such leases, because it might deprive them of the
opportunity to sell the land for building purposes. Similar
cH.vii PROFESSOR WALKER'S OBJECTIONS 431
conditions, modified by entail, exist in Great Britain, as
the report of the Royal Commission on the Housing of the
Working Classes ^ previously quoted from proves.
Similarly, large areas of mining land are everywhere
held out of use for speculative purposes. To such an
extent is this practice carried, that a special term " shep-
herding" has been invented for it. Combinations for
raising the price of mineral products, moreover, like the
Copper Trust lately formed in the United States, can only
succeed in their nefarious object by restricting the output,
either keeping mines idle, or what comes to the same
thing, reducing the output of mines. If they succeed, the
value of all such mines rises, not the value of the improve-
ments, but the value of the mining land.
Fixing his gaze upon the least valuable land, agri-
cultural land, alone, Mr. Walker has overlooked all these
cases in which speculation induces the idle holding of
much of the most valuable land in the community, enor-
mously increasing rent, reducing wages, and intensifying
many of the worst evils of our civilisation.*
1 See Part V. chapter v.
' On loth February 1899, Mr. E. J. C. Morton, M.P. for Devonport, referring in
the Home of Commons to the condition of this town, in support of an amendment to
the Address, in favour of land-value taxation, made the following statement : —
** The case which I want to bring before this House is not a case where the grievance
is that the inhabitants cannot purchase or become possessed of their holdings. It is a
case where there is a fiunine in land, and where the difficulty is to get the land on
which holdings can be built : where you actually have land held up by the landlord
for the purpose, and with the intention, and effect, of running up the rent of the
remainder. ...
** I have had experiences, in the course of going through my own constituency, which
are absolutely heartrending. I know one street of fifty-one houses with an average of
a whole fiunily for every room in it. I have gone into houses in which, going up the
stairs, one is afraid that one would put one's foot through the wood — through the actual
staircase — so absolutely rotten is the fabric. There I have found in one room a husband,
wife, and five children. On the same landing, in the only other room on that landing,
I have found the father of a family, an elderly man, and his wife, and a married
daughter and her child living in one room, in which they have to do all their cooking
and all their washing. They are living under conditions in which morality itself would
appear to be almost impossible, and yet — and, to my mind, that is the most dreadful
feature of the case — these people who exist in this condition are decent people — ^they
are respectable people — and I have actually had people living like this come to me and
beg me not to tell of the conditions under which they live, because they are ashamed of
it themselves, and yet these conditions are absolutely inflicted upon them against their
will, and without any remedy being possible by their exertions or the exertions of any
one else, excepting the exertions of this House."
On the same occasion, Mr. Flynn, M.P. for Cork, North, stated : —
** If there is one thing more than another which has tended to keep many of the
towns of Ireland in that backward, wretched, and dirty condition which so unfavourably
impresses visitors and every traveller through it, it is the system of ground landlordism
432 DEMOCRACY VERSUS SOCIAUSM partv
Mr. Walker's third and last point of attack is in-
geniously chosen. George states : " Irrespective of the
increase of population, the effect of improvements in
methods of production and exchange is to increase rent,"
and " the necessary result of material progress, land being
private property, is, no matter what the increase of popula-
tion, to force labourers to wages which give but a bare
living."
These and similar expressions of the same idea are
selected by Mr. Walker as the central point of the Single
Tax doctrine ; this he declares to be " Mr. George's main
proposition, the proposition to which the others are sub-
sidiary." The acumen with which Mr. Walker has
selected the most debatable point in Progress and Poverty
is admirable, but even if he had succeeded in disproving
it, the main part of the Single Tax doctrine would remain
unaffected. For were it shown, as Mr. Walker endeavours
to show, that rent does not increase through progress in
methods of production when population remains stationary ;
that under these conditions wages may rise permanently in
spite of private ownership of land, the question would still
be. Can a permanent rise in wages take place through im-
provements in productive methods, when population does
not remain stationary, when it is increasing in numbers ?
This is the actual condition accompanying progress in
which enables one landlord to hold the land of an entire town in his grasp, and to
refuse to part with it for building purposes except on the payment of enormous fines.
There is no escape, under such circumstances, from increased rents when the leases fall
in. There is nothing more depressing than to drive into an average Irish town and
see the tottering cabins, on which no sane man would think of laying money out,
because of the precariousness of the tenure, and the certainty that improvement would
result in profit, not to the man who made the improvement, but to the ground
landlord."
Mr. Asquith, M.P., confirmed these statements, as follows : —
** Take any of our great towns where the ownership of the soil is, as is very often
the case, in the hands of the single individual. What is the case there ? In the first
place, the owner may capriciously, or from a mistaken sense of his own interest, or a
thousand and one other motives, refuse to allow the use of his land for building and
other purposes — land which is absolutely necessary for the due development of the
community ; and he may hold back that land from the market in the hope that at
tome distant date he would obtain for it an increased value. In the meantime there
is no power vested in the community to obtain the land, which is so essential to its
life and health ; and while that land is lying idle it does not contribute, under our Uw,
a single penny to defray the growing expenses of the community. Is that an exaggerated
description of the existing state of things ? That it is possible under an existing law
nobody disputes ; it appears in case after case, town after town, and is within the
experience of hundreds of honourable Members of this House.''
cH.vii PROFESSOR WALKER'S OBJECTIONS 433
production ; and if private rent, under these conditions,
deprives the masses of the people of all participation in
industrial progress, of any share in the increased produce
of their labour, or if it deprives them only of a large share,
justice and humanity alike demand the abolition of the
private possession of rent.
Granted, therefore, that it were proved that George
somewhat exaggerated the facts of the case, his main
proposition would remain unaffected. Let us now see in
how far Mr. Walker succeeds in establishing such ex-
aggeration. He endeavours to do so by two methods :
first, by citing " plain facts of common observation, and
by unimpeachable testimony of industrial statistics";
second, by " the reason of the case."
Under the first head he cites ^statistics of wages of
agricultural labour in England to show that " the labourer
has gained in wages through the labour-saving inventions
and impro\jements of modern times," and quotes from
Professor Emile de Laveleye to show that profits and
interest have increased more than rent.
First as to wages. The Single Tax doctrine does not
involve the proposition, and George does not allege that
wages may not rise for a time under the impetus of a
continuous progress in production, especially when accom-
panied by a large exodus of population, such as has taken
place during the time adduced by Mr. Walker, i.e. between
1770 and 1870 in England. The question is. How long
could labour retain any portion of the result of an improve-
ment in production when all land is private property ? Mr.
Walker himself, as will presenUy be shown in fuU, states
that " economic rent tends to increase with the growth of
wealth and population." Improved methods of production
invariably result in increase of wealth, therefore, as Mr.
Walker admits, in increase of rent. Rent, however,
increases slowly through competition. Where, therefore,
progress in productive methods is continuous, as it has
been in Great Britain during the last century ; where, at
the same time, a large continent, not yet appropriated,
diminishes the local competition for land by withdrawing
millions of workers from the labour market, rent advances
2 F
434 DEMOCRACY VERSUS SOCIALISM part v
at a slower rate than productive power, and a margin
always remains which can be divided between labour and
its employers. But should such progress come to an end,
or should it materially slacken, rent will inevitably over-
take the increased productive power and wages and profit
must fall again — all the quicker if no more free land fit
for settlement by labourers were available.
In setting forth the reasons which explain the increase
of wages in Great Britain in conformity with the Single Tax
doctrine, no notice has been taken of those legislative
enactments which, like the abolition of the Corn Laws and
of protective legislation generally, have largely reduced the
exactions of monopoly. Yet that they have materially
assisted in increasing the amount of wealth for which
British labour exchanges at the present time would not
have been denied by Mr. Walker.
The second point, that regarding capital, ^is made
in the following quotation from Professor Emile de
Laveleye : —
"Who occupy the pretty houses and villas which are
springing up in every direction in all prosperous towns ?
Certainly more than two -thirds of these are fresh
capitalists. The value of capital engaged in industrial
enterprise exceeds that of land itself^ and its power of
accumulation is far greater than that of ground rents.
The immense fortunes amassed so rapidly in the United States^
like those of Mr. Gould and Mr. Vanderbilt^ were the results
of railway speculation and not of the greater value of
land.
" We see, then, that the increase of profits and of
interest takes a much larger proportion of the total value
of labour, and is a more general and powerful cause of in-
equality than the increase of rent." ^
Apart from the question whether profit and interest
could be as high as they are in the absence of the oppor-
tunity of investing in monopolies, it is clear that the same
considerations which account for the temporary increase of
wages also account for the temporary increase of capitalist
earnings. But there arises here the question. What is
^ Land and its Renty p. 169. (The italics are mine.)
cH.vii PROFESSOR WALKER'S OBJECTIONS 435
capital ? De Laveleye, and with him Mr. Walker, have
evidently mistaken land and monopoly values, and the
opportunity for speculation which these afford for capital,
as the italicised portions of the preceding quotation proves.
They have, similarly, overlooked the patent fact that
while many of the owners of "the pretty houses and
villas " may have rendered services equal in value to the
wealth obtained by them, which landowners do not, the
rest, perhaps the majority, may own their wealth by virtue
of monopoly-rights, either through increase in the rental-
value of urban land, or through speculation in mines, rail-
ways, gas and water shares, and similar privileges connected
with land. In any case, the misconception, made patent
in the above quotation, as to what constitutes capital,
deprives the demonstration of any argxmientative value.
Let us now turn to the reasons or the case as stated by
Mr. Walker : " It is not only true that an increased
production of wealth may involve an enhanced demand for
labour as well as for land, but it is also incontestably true
that the increased production of wealth rarely if ever
causes an increased demand for land without a correspond-
ing demand for labour ; while, on the contrary, an increased
production of wealth may cause an enormous increase in
the demand for labour without enhancing the demand for
the products of the soil in any degree whatsoever.
" Here is a pound of raw cotton, the production of
which makes a certain demand or drain upon the land.
To that cotton may be applied the labour of an opera-
tive for half an hour, worth, say, 5 cents. Successive
demands for the production of wealth may lead to the
application of, first a full hour's labour, then of two hours,
then of three, four, or five ; finer and finer fabrics being
successfully produced, until at last the pound of cotton
has been wrought into the most exquisite articles. Mr.
George says that the whole eflFect of any increase of
wealth is to enhance the demand for land. Here is a
large increase in production — twofold, threefold, tenfold,
perhaps, with no additional demand or drain upon the
soil.
" But I go further, and assert, without fear of contra-
i
436 DEMOCRACY VERSUS SOCIAUSM part v
diction . . . that the enhancement in the demand for
land, in the progress of society, habitually falls short of
the enhancement of the demand for labour, the increase of
production taking two great forms — one which involves no
increase whatever in the materials derived from the soil ;
the other in which the increased demand for land falls
short, generally far short, of the increased demand for
labour."
As an example of the first kind, Mr. Walker again
adduces that of the cotton increased in value by successive
doses of labour, and several others of the same kind.
No example is given to sustain the second statement.
Let us rest here and see what all this comes to. The
question is whether, " irrespective of the increase of
population, the effect of improvements in methods of
production and exchange is to increase rent," and it is
agreed that if improvements in methods of production do
not add to the demand for land, no such increase of rent
can take place. Mr. Walker, however, has again mis-
understood the problem. Not " increase in the production
of wealth " is in question, but improvements in methods
of production, i.e. improvements which enable the same
labour to produce more wealth or which enable the same
amount of wealth to be produced with less labour. The
facts on which he relies, therefore, are not to the point ;
nay, they do not even show that a greater production of
wealth has taken place. For obviously, had the same
labour been devoted to the production of a greater quantity
of cotton goods of inferior quality instead of making a
smaller quantity of superior quality, the production of
wealth might have been the same or greater. What he
has shown, therefore, is that labour may be directed to
produce the same amount of wealth from a smaller
quantity of raw material, thus reducing the demand for
land and for labour in the cultivation of land. That has
not been disputed, nor is such a change in the direction
of labour an " improvement in the methods of production/'
Cotton has been worked up to the finest cloth ; wood has
been converted into highly-priced furniture; Lucullian
dinners have been prepared from a time beyond the
cH.vii PROFESSOR WALKER'S OBJECTIONS 437
memory of man. What is meant by " improvements in
methods of production " is not in dispute. They consist
of those inventions and discoveries which increase the pro-
ductive power of labour, either in enabling the same
labour to produce more raw material or to convert more
raw material into finished products, or, to a much lesser